Correlation Between Hewlett Packard and HONEYWELL

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

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

Diversification Opportunities for Hewlett Packard and HONEYWELL

-0.09

Correlation Coefficient

Hewlett Packard  HONEYWELL

Good diversification

The 3 months correlation between Hewlett and HONEYWELL is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Hewlett Packard Enterprise and HONEYWELL INTERNATIONAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HONEYWELL INTERNATIONAL and Hewlett Packard 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 Hewlett Packard Enterprise 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 Hewlett Packard i.e., Hewlett Packard and HONEYWELL go up and down completely randomly.

Pair Corralation between Hewlett Packard and HONEYWELL

Assuming the 90 days trading horizon Hewlett Packard Enterprise is expected to under-perform the HONEYWELL. In addition to that, Hewlett Packard is 4.97 times more volatile than HONEYWELL INTERNATIONAL INC. It trades about -0.14 of its total potential returns per unit of risk. HONEYWELL INTERNATIONAL INC is currently generating about 0.05 per unit of volatility. If you would invest  8,210  in HONEYWELL INTERNATIONAL INC on December 25, 2024 and sell it today you would earn a total of  104.00  from holding HONEYWELL INTERNATIONAL INC or generate 1.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Hewlett Packard Enterprise  vs.  HONEYWELL INTERNATIONAL INC

Hewlett Packard Ente

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hewlett Packard Enterprise 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

HONEYWELL INTERNATIONAL

Risk-Adjusted Performance

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

Pair Trading with Hewlett Packard and HONEYWELL

The main advantage of trading using opposite Hewlett Packard and HONEYWELL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hewlett Packard 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 Hewlett Packard Enterprise 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.