Correlation Between HONEYWELL and Chemours

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

Diversification Opportunities for HONEYWELL and Chemours

0.46

Correlation Coefficient

HONEYWELL  Chemours

Very weak diversification

The 3 months correlation between HONEYWELL and Chemours is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding HONEYWELL INTERNATIONAL INC and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours 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 Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of HONEYWELL i.e., HONEYWELL and Chemours go up and down completely randomly.

Pair Corralation between HONEYWELL and Chemours

Assuming the 90 days trading horizon HONEYWELL INTERNATIONAL INC is expected to generate 0.05 times more return on investment than Chemours. However, HONEYWELL INTERNATIONAL INC is 18.35 times less risky than Chemours. It trades about 0.08 of its potential returns per unit of risk. Chemours Co is currently generating about -0.56 per unit of risk. If you would invest  9,846  in HONEYWELL INTERNATIONAL INC on October 8, 2024 and sell it today you would earn a total of  18.00  from holding HONEYWELL INTERNATIONAL INC or generate 0.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

HONEYWELL INTERNATIONAL INC  vs.  Chemours Co

HONEYWELL INTERNATIONAL

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HONEYWELL INTERNATIONAL INC are ranked lower than 1 (%) 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 newest stock price disturbance, may contribute to short-term losses for the investors.

Chemours

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chemours Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with HONEYWELL and Chemours

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

The idea behind HONEYWELL INTERNATIONAL INC and Chemours Co 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.