Correlation Between Marfrig Global and HONEYWELL

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

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

Diversification Opportunities for Marfrig Global and HONEYWELL

-0.15

Correlation Coefficient

Marfrig Global  HONEYWELL

Good diversification

The 3 months correlation between Marfrig and HONEYWELL is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and HONEYWELL INTERNATIONAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HONEYWELL INTERNATIONAL and Marfrig Global 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 Marfrig Global Foods 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 Marfrig Global i.e., Marfrig Global and HONEYWELL go up and down completely randomly.

Pair Corralation between Marfrig Global and HONEYWELL

Assuming the 90 days horizon Marfrig Global Foods is expected to generate 9.35 times more return on investment than HONEYWELL. However, Marfrig Global is 9.35 times more volatile than HONEYWELL INTERNATIONAL INC. It trades about 0.06 of its potential returns per unit of risk. HONEYWELL INTERNATIONAL INC is currently generating about 0.03 per unit of risk. If you would invest  267.00  in Marfrig Global Foods on December 25, 2024 and sell it today you would earn a total of  33.00  from holding Marfrig Global Foods or generate 12.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Marfrig Global Foods  vs.  HONEYWELL INTERNATIONAL INC

Marfrig Global Foods

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Marfrig Global showed solid returns over the last few months and may actually be approaching a breakup point.

HONEYWELL INTERNATIONAL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HONEYWELL INTERNATIONAL INC are ranked lower than 2 (%) 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 Marfrig Global and HONEYWELL

The main advantage of trading using opposite Marfrig Global and HONEYWELL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global 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 Marfrig Global Foods 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.