Correlation Between Honeywell International and ITOCHU
Can any of the company-specific risk be diversified away by investing in both Honeywell International and ITOCHU 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 ITOCHU into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honeywell International and ITOCHU, you can compare the effects of market volatilities on Honeywell International and ITOCHU 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 ITOCHU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honeywell International and ITOCHU.
Diversification Opportunities for Honeywell International and ITOCHU
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Honeywell and ITOCHU is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Honeywell International and ITOCHU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITOCHU 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 ITOCHU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITOCHU has no effect on the direction of Honeywell International i.e., Honeywell International and ITOCHU go up and down completely randomly.
Pair Corralation between Honeywell International and ITOCHU
Assuming the 90 days trading horizon Honeywell International is expected to generate 0.81 times more return on investment than ITOCHU. However, Honeywell International is 1.24 times less risky than ITOCHU. It trades about -0.08 of its potential returns per unit of risk. ITOCHU is currently generating about -0.23 per unit of risk. If you would invest 22,150 in Honeywell International on November 3, 2024 and sell it today you would lose (450.00) from holding Honeywell International or give up 2.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Honeywell International vs. ITOCHU
Performance |
| Timeline |
| Honeywell International |
| ITOCHU |
Honeywell International and ITOCHU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Honeywell International and ITOCHU
The main advantage of trading using opposite Honeywell International and ITOCHU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honeywell International position performs unexpectedly, ITOCHU 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 ITOCHU will offset losses from the drop in ITOCHU's long position.| Honeywell International vs. NH HOTEL GROUP | Honeywell International vs. Australian Agricultural | Honeywell International vs. China Railway Construction | Honeywell International vs. CARSALESCOM |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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