Correlation Between Honeywell International and Roper Technologies,

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

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

Diversification Opportunities for Honeywell International and Roper Technologies,

0.52

Correlation Coefficient

Honeywell International  Roper Technologies,

Very weak diversification

The 3 months correlation between Honeywell and Roper is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Honeywell International and Roper Technologies, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roper Technologies, 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 Roper Technologies,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roper Technologies, has no effect on the direction of Honeywell International i.e., Honeywell International and Roper Technologies, go up and down completely randomly.

Pair Corralation between Honeywell International and Roper Technologies,

Assuming the 90 days trading horizon Honeywell International is expected to generate 1.08 times more return on investment than Roper Technologies,. However, Honeywell International is 1.08 times more volatile than Roper Technologies,. It trades about 0.2 of its potential returns per unit of risk. Roper Technologies, is currently generating about 0.16 per unit of risk. If you would invest  119,249  in Honeywell International on October 6, 2024 and sell it today you would earn a total of  20,489  from holding Honeywell International or generate 17.18% return on investment over 90 days.

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

Honeywell International  vs.  Roper Technologies,

Honeywell International

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Honeywell International are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Honeywell International sustained solid returns over the last few months and may actually be approaching a breakup point.

Roper Technologies,

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Roper Technologies, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Roper Technologies, sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Honeywell International and Roper Technologies,

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

The idea behind Honeywell International and Roper Technologies, 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.