Correlation Between Honeywell International and Matthews International

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

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

Diversification Opportunities for Honeywell International and Matthews International

0.67

Correlation Coefficient

Honeywell International  Matthews International

Poor diversification

The 3 months correlation between Honeywell and Matthews is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Honeywell International and Matthews International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews International and Honeywell International 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 Honeywell International are associated (or correlated) with Matthews International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews International has no effect on the direction of Honeywell International i.e., Honeywell International and Matthews International go up and down completely randomly.

Pair Corralation between Honeywell International and Matthews International

Considering the 90-day investment horizon Honeywell International is expected to generate 0.39 times more return on investment than Matthews International. However, Honeywell International is 2.58 times less risky than Matthews International. It trades about -0.08 of its potential returns per unit of risk. Matthews International is currently generating about -0.08 per unit of risk. If you would invest  22,539  in Honeywell International on December 29, 2024 and sell it today you would lose (1,505) from holding Honeywell International or give up 6.68% of portfolio value over 90 days.

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

Honeywell International  vs.  Matthews International

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.

Matthews International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matthews International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Honeywell International and Matthews International

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

The idea behind Honeywell International and Matthews 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.