Correlation Between Noble Plc and HONEYWELL

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

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

Diversification Opportunities for Noble Plc and HONEYWELL

-0.24

Correlation Coefficient

Noble Plc  HONEYWELL

Very good diversification

The 3 months correlation between Noble and HONEYWELL is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Noble plc and HONEYWELL INTERNATIONAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HONEYWELL INTERNATIONAL and Noble Plc 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 Noble plc 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 Noble Plc i.e., Noble Plc and HONEYWELL go up and down completely randomly.

Pair Corralation between Noble Plc and HONEYWELL

Allowing for the 90-day total investment horizon Noble plc is expected to under-perform the HONEYWELL. In addition to that, Noble Plc is 3.86 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 0.04 per unit of volatility. If you would invest  8,172  in HONEYWELL INTERNATIONAL INC on December 24, 2024 and sell it today you would earn a total of  142.00  from holding HONEYWELL INTERNATIONAL INC or generate 1.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Noble plc  vs.  HONEYWELL INTERNATIONAL INC

Noble plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Noble plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

HONEYWELL INTERNATIONAL

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HONEYWELL INTERNATIONAL INC are ranked lower than 3 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Noble Plc and HONEYWELL

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