Correlation Between United Breweries and Honeywell International
Can any of the company-specific risk be diversified away by investing in both United Breweries 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 United Breweries and Honeywell International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Breweries Co and Honeywell International, you can compare the effects of market volatilities on United Breweries 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 United Breweries with a short position of Honeywell International. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and Honeywell International.
Diversification Opportunities for United Breweries and Honeywell International
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Honeywell is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and Honeywell International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell International and United Breweries 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 United Breweries Co 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 United Breweries i.e., United Breweries and Honeywell International go up and down completely randomly.
Pair Corralation between United Breweries and Honeywell International
Assuming the 90 days trading horizon United Breweries is expected to generate 8.47 times less return on investment than Honeywell International. But when comparing it to its historical volatility, United Breweries Co is 1.11 times less risky than Honeywell International. It trades about 0.04 of its potential returns per unit of risk. Honeywell International is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 18,964 in Honeywell International on August 29, 2024 and sell it today you would earn a total of 3,036 from holding Honeywell International or generate 16.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Breweries Co vs. Honeywell International
Performance |
| Timeline |
| United Breweries |
| Honeywell International |
United Breweries and Honeywell International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and Honeywell International
The main advantage of trading using opposite United Breweries and Honeywell International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries 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.| United Breweries vs. Apple Inc | United Breweries vs. Apple Inc | United Breweries vs. Apple Inc | United Breweries vs. Apple Inc |
| Honeywell International vs. Siamgas And Petrochemicals | Honeywell International vs. NISSAN CHEMICAL IND | Honeywell International vs. BOSTON BEER A | Honeywell International vs. United Breweries Co |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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