Correlation Between HONEYWELL and Copperbank Resources

Can any of the company-specific risk be diversified away by investing in both HONEYWELL and Copperbank Resources 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 Copperbank Resources 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 Copperbank Resources Corp, you can compare the effects of market volatilities on HONEYWELL and Copperbank Resources 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 Copperbank Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of HONEYWELL and Copperbank Resources.

Diversification Opportunities for HONEYWELL and Copperbank Resources

-0.08

Correlation Coefficient

HONEYWELL  Copperbank Resources

Good diversification

The 3 months correlation between HONEYWELL and Copperbank is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding HONEYWELL INTERNATIONAL INC and Copperbank Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copperbank Resources 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 Copperbank Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copperbank Resources Corp has no effect on the direction of HONEYWELL i.e., HONEYWELL and Copperbank Resources go up and down completely randomly.

Pair Corralation between HONEYWELL and Copperbank Resources

Assuming the 90 days trading horizon HONEYWELL INTERNATIONAL INC is expected to generate 1.09 times more return on investment than Copperbank Resources. However, HONEYWELL is 1.09 times more volatile than Copperbank Resources Corp. It trades about 0.13 of its potential returns per unit of risk. Copperbank Resources Corp is currently generating about 0.13 per unit of risk. If you would invest  6,343  in HONEYWELL INTERNATIONAL INC on December 26, 2024 and sell it today you would earn a total of  1,169  from holding HONEYWELL INTERNATIONAL INC or generate 18.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.33%
Values	Daily Returns

HONEYWELL INTERNATIONAL INC  vs.  Copperbank Resources Corp

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.

Copperbank Resources Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Copperbank Resources Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward-looking signals, Copperbank Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HONEYWELL and Copperbank Resources

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

The idea behind HONEYWELL INTERNATIONAL INC and Copperbank Resources 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.