Correlation Between Designer Brands and HONEYWELL

Can any of the company-specific risk be diversified away by investing in both Designer Brands and HONEYWELL at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Designer Brands and HONEYWELL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Designer Brands and HONEYWELL INTERNATIONAL INC, you can compare the effects of market volatilities on Designer Brands and HONEYWELL and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Designer Brands with a short position of HONEYWELL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Designer Brands and HONEYWELL.

Diversification Opportunities for Designer Brands and HONEYWELL

-0.13

Correlation Coefficient

Designer Brands  HONEYWELL

Good diversification

The 3 months correlation between Designer and HONEYWELL is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Designer Brands and HONEYWELL INTERNATIONAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HONEYWELL INTERNATIONAL and Designer Brands is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Designer Brands are associated (or correlated) with HONEYWELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HONEYWELL INTERNATIONAL has no effect on the direction of Designer Brands i.e., Designer Brands and HONEYWELL go up and down completely randomly.

Pair Corralation between Designer Brands and HONEYWELL

Considering the 90-day investment horizon Designer Brands is expected to under-perform the HONEYWELL. In addition to that, Designer Brands is 7.29 times more volatile than HONEYWELL INTERNATIONAL INC. It trades about -0.01 of its total potential returns per unit of risk. HONEYWELL INTERNATIONAL INC is currently generating about -0.02 per unit of volatility. If you would invest  8,562  in HONEYWELL INTERNATIONAL INC on October 23, 2024 and sell it today you would lose (524.00) from holding HONEYWELL INTERNATIONAL INC or give up 6.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.38%
Values	Daily Returns

Designer Brands  vs.  HONEYWELL INTERNATIONAL INC

Designer Brands

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Designer Brands are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, Designer Brands is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

HONEYWELL INTERNATIONAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HONEYWELL INTERNATIONAL INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HONEYWELL INTERNATIONAL INC investors.

Pair Trading with Designer Brands and HONEYWELL

The main advantage of trading using opposite Designer Brands and HONEYWELL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Designer Brands position performs unexpectedly, HONEYWELL can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in HONEYWELL will offset losses from the drop in HONEYWELL's long position.

The idea behind Designer Brands and HONEYWELL INTERNATIONAL INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.