Correlation Between Live Nation and Honeywell International

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

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

Diversification Opportunities for Live Nation and Honeywell International

0.65

Correlation Coefficient

Live Nation  Honeywell International

Poor diversification

The 3 months correlation between Live and Honeywell is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment, and Honeywell International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell International and Live Nation 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 Live Nation Entertainment, 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 Live Nation i.e., Live Nation and Honeywell International go up and down completely randomly.

Pair Corralation between Live Nation and Honeywell International

Assuming the 90 days trading horizon Live Nation Entertainment, is expected to under-perform the Honeywell International. But the stock apears to be less risky and, when comparing its historical volatility, Live Nation Entertainment, is 1.23 times less risky than Honeywell International. The stock trades about -0.12 of its potential returns per unit of risk. The Honeywell International is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  134,504  in Honeywell International on October 9, 2024 and sell it today you would earn a total of  5,234  from holding Honeywell International or generate 3.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.44%
Values	Daily Returns

Live Nation Entertainment,  vs.  Honeywell International

Live Nation Entertai

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment, are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Live Nation sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Live Nation and Honeywell International

The main advantage of trading using opposite Live Nation and Honeywell International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation 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 Live Nation Entertainment, 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.