Correlation Between HONEYWELL and Simon Property

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

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

Diversification Opportunities for HONEYWELL and Simon Property

0.73

Correlation Coefficient

HONEYWELL  Simon Property

Poor diversification

The 3 months correlation between HONEYWELL and Simon is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding HONEYWELL INTL INC and Simon Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simon Property Group and HONEYWELL 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 HONEYWELL INTL INC are associated (or correlated) with Simon Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simon Property Group has no effect on the direction of HONEYWELL i.e., HONEYWELL and Simon Property go up and down completely randomly.

Pair Corralation between HONEYWELL and Simon Property

Assuming the 90 days trading horizon HONEYWELL INTL INC is expected to generate 1.54 times more return on investment than Simon Property. However, HONEYWELL is 1.54 times more volatile than Simon Property Group. It trades about 0.09 of its potential returns per unit of risk. Simon Property Group is currently generating about -0.12 per unit of risk. If you would invest  10,149  in HONEYWELL INTL INC on October 11, 2024 and sell it today you would earn a total of  360.00  from holding HONEYWELL INTL INC or generate 3.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	65.0%
Values	Daily Returns

HONEYWELL INTL INC  vs.  Simon Property Group

HONEYWELL INTL INC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HONEYWELL INTL 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 current stock price disturbance, may contribute to short-term losses for the investors.

Simon Property Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simon Property Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady technical and fundamental indicators, Simon Property is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with HONEYWELL and Simon Property

The main advantage of trading using opposite HONEYWELL and Simon Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HONEYWELL position performs unexpectedly, Simon Property 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 Simon Property will offset losses from the drop in Simon Property's long position.

The idea behind HONEYWELL INTL INC and Simon Property Group 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.