Correlation Between Summa Silver and HONEYWELL

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

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

Diversification Opportunities for Summa Silver and HONEYWELL

0.0

Correlation Coefficient

Summa Silver  HONEYWELL

Pay attention - limited upside

The 3 months correlation between Summa and HONEYWELL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Summa Silver Corp and HONEYWELL INTERNATIONAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HONEYWELL INTERNATIONAL and Summa Silver 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 Summa Silver Corp 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 Summa Silver i.e., Summa Silver and HONEYWELL go up and down completely randomly.

Pair Corralation between Summa Silver and HONEYWELL

Assuming the 90 days horizon Summa Silver Corp is expected to generate 1.7 times more return on investment than HONEYWELL. However, Summa Silver is 1.7 times more volatile than HONEYWELL INTERNATIONAL INC. It trades about 0.11 of its potential returns per unit of risk. HONEYWELL INTERNATIONAL INC is currently generating about 0.13 per unit of risk. If you would invest  18.00  in Summa Silver Corp on December 29, 2024 and sell it today you would earn a total of  6.00  from holding Summa Silver Corp or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	78.69%
Values	Daily Returns

Summa Silver Corp  vs.  HONEYWELL INTERNATIONAL INC

Summa Silver Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Summa Silver Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Summa Silver reported solid returns over the last few months and may actually be approaching a breakup point.

HONEYWELL INTERNATIONAL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HONEYWELL INTERNATIONAL INC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HONEYWELL sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Summa Silver and HONEYWELL

The main advantage of trading using opposite Summa Silver and HONEYWELL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summa Silver 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 Summa Silver Corp 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.