Correlation Between XRP and HONEYWELL

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

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

Diversification Opportunities for XRP and HONEYWELL

-0.23

Correlation Coefficient

XRP  HONEYWELL

Very good diversification

The 3 months correlation between XRP and HONEYWELL is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding XRP and HONEYWELL INTERNATIONAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HONEYWELL INTERNATIONAL and XRP 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 XRP are associated (or correlated) with HONEYWELL. 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 XRP i.e., XRP and HONEYWELL go up and down completely randomly.

Pair Corralation between XRP and HONEYWELL

Assuming the 90 days trading horizon XRP is expected to generate 13.96 times more return on investment than HONEYWELL. However, XRP is 13.96 times more volatile than HONEYWELL INTERNATIONAL INC. It trades about 0.03 of its potential returns per unit of risk. HONEYWELL INTERNATIONAL INC is currently generating about -0.03 per unit of risk. If you would invest  230.00  in XRP on December 24, 2024 and sell it today you would earn a total of  7.00  from holding XRP or generate 3.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

XRP  vs.  HONEYWELL INTERNATIONAL INC

XRP

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, XRP may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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

Pair Trading with XRP and HONEYWELL

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

The idea behind XRP and HONEYWELL INTERNATIONAL INC 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.