Correlation Between Joint Stock and HONEYWELL

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

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

Diversification Opportunities for Joint Stock and HONEYWELL

0.57

Correlation Coefficient

Joint Stock  HONEYWELL

Very weak diversification

The 3 months correlation between Joint and HONEYWELL is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Joint Stock and HONEYWELL INTERNATIONAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HONEYWELL INTERNATIONAL and Joint Stock 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 Joint Stock 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 Joint Stock i.e., Joint Stock and HONEYWELL go up and down completely randomly.

Pair Corralation between Joint Stock and HONEYWELL

Given the investment horizon of 90 days Joint Stock is expected to under-perform the HONEYWELL. In addition to that, Joint Stock is 1.73 times more volatile than HONEYWELL INTERNATIONAL INC. It trades about -0.1 of its total potential returns per unit of risk. HONEYWELL INTERNATIONAL INC is currently generating about -0.03 per unit of volatility. If you would invest  8,333  in HONEYWELL INTERNATIONAL INC on October 24, 2024 and sell it today you would lose (216.00) from holding HONEYWELL INTERNATIONAL INC or give up 2.59% of portfolio value over 90 days.

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

Joint Stock  vs.  HONEYWELL INTERNATIONAL INC

Joint Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Joint Stock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 Joint Stock and HONEYWELL

The main advantage of trading using opposite Joint Stock and HONEYWELL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Joint Stock 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 Joint Stock 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.