Correlation Between Innovator Loup and HONEYWELL

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

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

Diversification Opportunities for Innovator Loup and HONEYWELL

0.53

Correlation Coefficient

Innovator Loup  HONEYWELL

Very weak diversification

The 3 months correlation between Innovator and HONEYWELL is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Innovator Loup Frontier and HONEYWELL INTERNATIONAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HONEYWELL INTERNATIONAL and Innovator Loup 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 Innovator Loup Frontier 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 Innovator Loup i.e., Innovator Loup and HONEYWELL go up and down completely randomly.

Pair Corralation between Innovator Loup and HONEYWELL

Given the investment horizon of 90 days Innovator Loup Frontier is expected to under-perform the HONEYWELL. In addition to that, Innovator Loup is 12.2 times more volatile than HONEYWELL INTERNATIONAL INC. It trades about -0.08 of its total potential returns per unit of risk. HONEYWELL INTERNATIONAL INC is currently generating about -0.02 per unit of volatility. If you would invest  9,313  in HONEYWELL INTERNATIONAL INC on December 30, 2024 and sell it today you would lose (25.00) from holding HONEYWELL INTERNATIONAL INC or give up 0.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Innovator Loup Frontier  vs.  HONEYWELL INTERNATIONAL INC

Innovator Loup Frontier

Risk-Adjusted Performance

Very Weak

Over the last 90 days Innovator Loup Frontier has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Etf's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

HONEYWELL INTERNATIONAL

Risk-Adjusted Performance

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 Innovator Loup and HONEYWELL

The main advantage of trading using opposite Innovator Loup and HONEYWELL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator Loup 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 Innovator Loup Frontier 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.