Correlation Between Charter Communications and Honeywell International
Can any of the company-specific risk be diversified away by investing in both Charter Communications 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 Charter Communications and Honeywell International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications and Honeywell International, you can compare the effects of market volatilities on Charter Communications 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 Charter Communications with a short position of Honeywell International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Honeywell International.
Diversification Opportunities for Charter Communications and Honeywell International
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Charter and Honeywell is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Honeywell International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell International and Charter Communications 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 Charter Communications 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 Charter Communications i.e., Charter Communications and Honeywell International go up and down completely randomly.
Pair Corralation between Charter Communications and Honeywell International
Assuming the 90 days trading horizon Charter Communications is expected to generate 1.55 times more return on investment than Honeywell International. However, Charter Communications is 1.55 times more volatile than Honeywell International. It trades about 0.14 of its potential returns per unit of risk. Honeywell International is currently generating about 0.14 per unit of risk. If you would invest 2,295 in Charter Communications on September 3, 2024 and sell it today you would earn a total of 1,687 from holding Charter Communications or generate 73.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 91.07% |
| Values | Daily Returns |
Charter Communications vs. Honeywell International
Performance |
| Timeline |
| Charter Communications |
| Honeywell International |
Charter Communications and Honeywell International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and Honeywell International
The main advantage of trading using opposite Charter Communications and Honeywell International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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.| Charter Communications vs. Zoom Video Communications | Charter Communications vs. Bio Techne | Charter Communications vs. Livetech da Bahia | Charter Communications vs. Lupatech SA |
| Honeywell International vs. Bio Techne | Honeywell International vs. Spotify Technology SA | Honeywell International vs. Broadcom | Honeywell International vs. Metalurgica Gerdau SA |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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