Correlation Between Lendlease and Honeywell International

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

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

Diversification Opportunities for Lendlease and Honeywell International

-0.16

Correlation Coefficient

Lendlease  Honeywell International

Good diversification

The 3 months correlation between Lendlease and Honeywell is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and Honeywell International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell International and Lendlease 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 Lendlease Group 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 Lendlease i.e., Lendlease and Honeywell International go up and down completely randomly.

Pair Corralation between Lendlease and Honeywell International

Assuming the 90 days trading horizon Lendlease Group is expected to under-perform the Honeywell International. But the stock apears to be less risky and, when comparing its historical volatility, Lendlease Group is 1.18 times less risky than Honeywell International. The stock trades about -0.09 of its potential returns per unit of risk. The Honeywell International is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  20,400  in Honeywell International on October 23, 2024 and sell it today you would earn a total of  1,360  from holding Honeywell International or generate 6.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Lendlease Group  vs.  Honeywell International

Lendlease Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lendlease Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Honeywell International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Honeywell International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Honeywell International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Lendlease and Honeywell International

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

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.