Correlation Between Getty Realty and HONEYWELL

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

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

Diversification Opportunities for Getty Realty and HONEYWELL

0.08

Correlation Coefficient

Getty Realty  HONEYWELL

Significant diversification

The 3 months correlation between Getty and HONEYWELL is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Getty Realty and HONEYWELL INTERNATIONAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HONEYWELL INTERNATIONAL and Getty Realty 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 Getty Realty 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 Getty Realty i.e., Getty Realty and HONEYWELL go up and down completely randomly.

Pair Corralation between Getty Realty and HONEYWELL

Considering the 90-day investment horizon Getty Realty is expected to under-perform the HONEYWELL. But the stock apears to be less risky and, when comparing its historical volatility, Getty Realty is 5.41 times less risky than HONEYWELL. The stock trades about -0.31 of its potential returns per unit of risk. The HONEYWELL INTERNATIONAL INC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  6,679  in HONEYWELL INTERNATIONAL INC on October 11, 2024 and sell it today you would lose (152.00) from holding HONEYWELL INTERNATIONAL INC or give up 2.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	80.0%
Values	Daily Returns

Getty Realty  vs.  HONEYWELL INTERNATIONAL INC

Getty Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Getty Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Getty Realty is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 somewhat strong basic indicators, HONEYWELL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Getty Realty and HONEYWELL

The main advantage of trading using opposite Getty Realty and HONEYWELL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Getty Realty 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 Getty Realty 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.