Correlation Between Disney and Honeywell International
Can any of the company-specific risk be diversified away by investing in both Disney 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 Disney and Honeywell International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Walt Disney and Honeywell International, you can compare the effects of market volatilities on Disney 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 Disney with a short position of Honeywell International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Honeywell International.
Diversification Opportunities for Disney and Honeywell International
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Disney and Honeywell is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding The Walt Disney and Honeywell International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell International and Disney 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 The Walt Disney 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 Disney i.e., Disney and Honeywell International go up and down completely randomly.
Pair Corralation between Disney and Honeywell International
Assuming the 90 days trading horizon Disney is expected to generate 1.04 times less return on investment than Honeywell International. In addition to that, Disney is 1.23 times more volatile than Honeywell International. It trades about 0.03 of its total potential returns per unit of risk. Honeywell International is currently generating about 0.04 per unit of volatility. If you would invest 334,794 in Honeywell International on December 6, 2024 and sell it today you would earn a total of 93,594 from holding Honeywell International or generate 27.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Walt Disney vs. Honeywell International
Performance |
| Timeline |
| Walt Disney |
| Honeywell International |
Disney and Honeywell International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Honeywell International
The main advantage of trading using opposite Disney and Honeywell International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney 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.| Disney vs. Hoteles City Express | Disney vs. McEwen Mining | Disney vs. The Bank of | Disney vs. Micron Technology |
| Honeywell International vs. KB Home | Honeywell International vs. Steel Dynamics | Honeywell International vs. Grupo Sports World | Honeywell International vs. First Republic Bank |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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