Correlation Between DENTSPLY SIRONA and Honeywell International

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

By analyzing existing cross correlation between DENTSPLY SIRONA and Honeywell International, you can compare the effects of market volatilities on DENTSPLY SIRONA and Honeywell International 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 DENTSPLY SIRONA with a short position of Honeywell International. Check out your portfolio center. Please also check ongoing floating volatility patterns of DENTSPLY SIRONA and Honeywell International.

Diversification Opportunities for DENTSPLY SIRONA and Honeywell International

-0.4

Correlation Coefficient

DENTSPLY SIRONA  Honeywell International

Very good diversification

The 3 months correlation between DENTSPLY and Honeywell is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding DENTSPLY SIRONA and Honeywell International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell International and DENTSPLY SIRONA 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 DENTSPLY SIRONA are associated (or correlated) with Honeywell International. 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 DENTSPLY SIRONA i.e., DENTSPLY SIRONA and Honeywell International go up and down completely randomly.

Pair Corralation between DENTSPLY SIRONA and Honeywell International

Assuming the 90 days trading horizon DENTSPLY SIRONA is expected to generate 0.08 times more return on investment than Honeywell International. However, DENTSPLY SIRONA is 13.02 times less risky than Honeywell International. It trades about 0.24 of its potential returns per unit of risk. Honeywell International is currently generating about -0.12 per unit of risk. If you would invest  13,955  in DENTSPLY SIRONA on October 23, 2024 and sell it today you would earn a total of  68.00  from holding DENTSPLY SIRONA or generate 0.49% return on investment over 90 days.

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

DENTSPLY SIRONA  vs.  Honeywell International

DENTSPLY SIRONA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DENTSPLY SIRONA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DENTSPLY SIRONA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Honeywell International

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Honeywell International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Honeywell International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with DENTSPLY SIRONA and Honeywell International

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

The idea behind DENTSPLY SIRONA and Honeywell International 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.