Correlation Between Harte Hanks and Honeywell International

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

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

Diversification Opportunities for Harte Hanks and Honeywell International

0.31

Correlation Coefficient

Harte Hanks  Honeywell International

Weak diversification

The 3 months correlation between Harte and Honeywell is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Harte Hanks and Honeywell International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell International and Harte Hanks 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 Harte Hanks 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 Harte Hanks i.e., Harte Hanks and Honeywell International go up and down completely randomly.

Pair Corralation between Harte Hanks and Honeywell International

Considering the 90-day investment horizon Harte Hanks is expected to under-perform the Honeywell International. In addition to that, Harte Hanks is 1.62 times more volatile than Honeywell International. It trades about -0.08 of its total potential returns per unit of risk. Honeywell International is currently generating about -0.11 per unit of volatility. If you would invest  23,293  in Honeywell International on November 29, 2024 and sell it today you would lose (2,160) from holding Honeywell International or give up 9.27% of portfolio value over 90 days.

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

Harte Hanks  vs.  Honeywell International

Harte Hanks

Risk-Adjusted Performance

Very Weak

Over the last 90 days Harte Hanks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Honeywell International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Honeywell International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Harte Hanks and Honeywell International

The main advantage of trading using opposite Harte Hanks and Honeywell International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harte Hanks 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 Harte Hanks 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 Stocks Directory module to find actively traded stocks across global markets.