Correlation Between Postal Realty and HONEYWELL

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

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

Diversification Opportunities for Postal Realty and HONEYWELL

0.57

Correlation Coefficient

Postal Realty  HONEYWELL

Very weak diversification

The 3 months correlation between Postal and HONEYWELL is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Postal Realty Trust and HONEYWELL INTERNATIONAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HONEYWELL INTERNATIONAL and Postal Realty 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 Postal Realty Trust 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 Postal Realty i.e., Postal Realty and HONEYWELL go up and down completely randomly.

Pair Corralation between Postal Realty and HONEYWELL

Given the investment horizon of 90 days Postal Realty Trust is expected to under-perform the HONEYWELL. In addition to that, Postal Realty is 6.76 times more volatile than HONEYWELL INTERNATIONAL INC. It trades about -0.01 of its total potential returns per unit of risk. HONEYWELL INTERNATIONAL INC is currently generating about 0.08 per unit of volatility. If you would invest  9,569  in HONEYWELL INTERNATIONAL INC on October 7, 2024 and sell it today you would earn a total of  244.00  from holding HONEYWELL INTERNATIONAL INC or generate 2.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.12%
Values	Daily Returns

Postal Realty Trust  vs.  HONEYWELL INTERNATIONAL INC

Postal Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Postal Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

HONEYWELL INTERNATIONAL

Risk-Adjusted Performance

0 of 100

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Postal Realty and HONEYWELL

The main advantage of trading using opposite Postal Realty and HONEYWELL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postal Realty 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 Postal Realty Trust 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.