Correlation Between HONEYWELL and Bowen Acquisition

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

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

Diversification Opportunities for HONEYWELL and Bowen Acquisition

-0.71

Correlation Coefficient

HONEYWELL  Bowen Acquisition

Pay attention - limited upside

The 3 months correlation between HONEYWELL and Bowen is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding HONEYWELL INTERNATIONAL INC and Bowen Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowen Acquisition Corp 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 INTERNATIONAL INC are associated (or correlated) with Bowen Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowen Acquisition Corp has no effect on the direction of HONEYWELL i.e., HONEYWELL and Bowen Acquisition go up and down completely randomly.

Pair Corralation between HONEYWELL and Bowen Acquisition

Assuming the 90 days trading horizon HONEYWELL INTERNATIONAL INC is expected to generate 0.03 times more return on investment than Bowen Acquisition. However, HONEYWELL INTERNATIONAL INC is 30.15 times less risky than Bowen Acquisition. It trades about -0.03 of its potential returns per unit of risk. Bowen Acquisition Corp is currently generating about -0.01 per unit of risk. If you would invest  9,140  in HONEYWELL INTERNATIONAL INC on December 23, 2024 and sell it today you would lose (70.00) from holding HONEYWELL INTERNATIONAL INC or give up 0.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

HONEYWELL INTERNATIONAL INC  vs.  Bowen Acquisition Corp

HONEYWELL INTERNATIONAL

Risk-Adjusted Performance

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

Bowen Acquisition Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bowen Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with HONEYWELL and Bowen Acquisition

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

The idea behind HONEYWELL INTERNATIONAL INC and Bowen Acquisition Corp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.