Correlation Between Honeywell International and Superior Plus
Can any of the company-specific risk be diversified away by investing in both Honeywell International and Superior Plus 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 International and Superior Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honeywell International and Superior Plus Corp, you can compare the effects of market volatilities on Honeywell International and Superior Plus 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 International with a short position of Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honeywell International and Superior Plus.
Diversification Opportunities for Honeywell International and Superior Plus
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Honeywell and Superior is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Honeywell International and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp and Honeywell International 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 are associated (or correlated) with Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of Honeywell International i.e., Honeywell International and Superior Plus go up and down completely randomly.
Pair Corralation between Honeywell International and Superior Plus
Assuming the 90 days trading horizon Honeywell International is expected to generate 0.32 times more return on investment than Superior Plus. However, Honeywell International is 3.13 times less risky than Superior Plus. It trades about 0.32 of its potential returns per unit of risk. Superior Plus Corp is currently generating about -0.04 per unit of risk. If you would invest 19,557 in Honeywell International on August 25, 2024 and sell it today you would earn a total of 2,423 from holding Honeywell International or generate 12.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Honeywell International vs. Superior Plus Corp
Performance |
| Timeline |
| Honeywell International |
| Superior Plus Corp |
Honeywell International and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Honeywell International and Superior Plus
The main advantage of trading using opposite Honeywell International and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honeywell International position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.| Honeywell International vs. WillScot Mobile Mini | Honeywell International vs. Ribbon Communications | Honeywell International vs. SEKISUI CHEMICAL | Honeywell International vs. PTT Global Chemical |
| Superior Plus vs. Fast Retailing Co | Superior Plus vs. Auto Trader Group | Superior Plus vs. Monster Beverage Corp | Superior Plus vs. Suntory Beverage Food |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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