Correlation Between Superior Plus and Honeywell International
Can any of the company-specific risk be diversified away by investing in both Superior Plus 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 Superior Plus and Honeywell International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and Honeywell International, you can compare the effects of market volatilities on Superior Plus 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 Superior Plus with a short position of Honeywell International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Honeywell International.
Diversification Opportunities for Superior Plus and Honeywell International
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Superior and Honeywell is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Honeywell International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell International and Superior Plus 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 Superior Plus Corp 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 Superior Plus i.e., Superior Plus and Honeywell International go up and down completely randomly.
Pair Corralation between Superior Plus and Honeywell International
Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the Honeywell International. In addition to that, Superior Plus is 3.14 times more volatile than Honeywell International. It trades about -0.01 of its total potential returns per unit of risk. Honeywell International is currently generating about 0.41 per unit of volatility. If you would invest 19,056 in Honeywell International on August 29, 2024 and sell it today you would earn a total of 2,909 from holding Honeywell International or generate 15.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Plus Corp vs. Honeywell International
Performance |
| Timeline |
| Superior Plus Corp |
| Honeywell International |
Superior Plus and Honeywell International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and Honeywell International
The main advantage of trading using opposite Superior Plus and Honeywell International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus 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.| Superior Plus vs. Canon Marketing Japan | Superior Plus vs. CANON MARKETING JP | Superior Plus vs. KRISPY KREME DL 01 | Superior Plus vs. SIDETRADE EO 1 |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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