Correlation Between Franklin Covey and Honeywell International

Can any of the company-specific risk be diversified away by investing in both Franklin Covey and Honeywell International 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 Franklin Covey and Honeywell International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Franklin Covey and Honeywell International, you can compare the effects of market volatilities on Franklin Covey and Honeywell International 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 Franklin Covey with a short position of Honeywell International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Covey and Honeywell International.

Diversification Opportunities for Franklin Covey and Honeywell International

-0.75

Correlation Coefficient

Franklin Covey  Honeywell International

Pay attention - limited upside

The 3 months correlation between Franklin and Honeywell is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Covey and Honeywell International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell International and Franklin Covey 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 Franklin Covey are associated (or correlated) with Honeywell International. 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 Franklin Covey i.e., Franklin Covey and Honeywell International go up and down completely randomly.

Pair Corralation between Franklin Covey and Honeywell International

Allowing for the 90-day total investment horizon Franklin Covey is expected to generate 1.17 times more return on investment than Honeywell International. However, Franklin Covey is 1.17 times more volatile than Honeywell International. It trades about 0.04 of its potential returns per unit of risk. Honeywell International is currently generating about 0.03 per unit of risk. If you would invest  3,675  in Franklin Covey on October 8, 2024 and sell it today you would earn a total of  31.00  from holding Franklin Covey or generate 0.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Franklin Covey  vs.  Honeywell International

Franklin Covey

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Covey has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Franklin Covey is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Honeywell International

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Honeywell International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Honeywell International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Franklin Covey and Honeywell International

The main advantage of trading using opposite Franklin Covey and Honeywell International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Covey position performs unexpectedly, Honeywell International 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 International will offset losses from the drop in Honeywell International's long position.

The idea behind Franklin Covey and Honeywell International 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.