Correlation Between Fidus Investment and HONEYWELL

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

By analyzing existing cross correlation between Fidus Investment Corp and HONEYWELL INTERNATIONAL INC, you can compare the effects of market volatilities on Fidus Investment 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 Fidus Investment with a short position of HONEYWELL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidus Investment and HONEYWELL.

Diversification Opportunities for Fidus Investment and HONEYWELL

-0.52

Correlation Coefficient

Fidus Investment  HONEYWELL

Excellent diversification

The 3 months correlation between Fidus and HONEYWELL is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and HONEYWELL INTERNATIONAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HONEYWELL INTERNATIONAL and Fidus Investment 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 Fidus Investment Corp 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 Fidus Investment i.e., Fidus Investment and HONEYWELL go up and down completely randomly.

Pair Corralation between Fidus Investment and HONEYWELL

Given the investment horizon of 90 days Fidus Investment is expected to generate 91.21 times less return on investment than HONEYWELL. But when comparing it to its historical volatility, Fidus Investment Corp is 5.86 times less risky than HONEYWELL. It trades about 0.01 of its potential returns per unit of risk. HONEYWELL INTERNATIONAL INC is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  6,651  in HONEYWELL INTERNATIONAL INC on September 24, 2024 and sell it today you would earn a total of  811.00  from holding HONEYWELL INTERNATIONAL INC or generate 12.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	66.67%
Values	Daily Returns

Fidus Investment Corp  vs.  HONEYWELL INTERNATIONAL INC

Fidus Investment Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Fidus Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

HONEYWELL INTERNATIONAL

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HONEYWELL INTERNATIONAL INC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, HONEYWELL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fidus Investment and HONEYWELL

The main advantage of trading using opposite Fidus Investment and HONEYWELL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidus Investment 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 Fidus Investment Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.