Correlation Between IShares Trust and Honeywell International
Can any of the company-specific risk be diversified away by investing in both IShares Trust 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 IShares Trust and Honeywell International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and Honeywell International, you can compare the effects of market volatilities on IShares Trust 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 IShares Trust with a short position of Honeywell International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Honeywell International.
Diversification Opportunities for IShares Trust and Honeywell International
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Honeywell is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Honeywell International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell International and IShares Trust 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 iShares Trust 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 IShares Trust i.e., IShares Trust and Honeywell International go up and down completely randomly.
Pair Corralation between IShares Trust and Honeywell International
Assuming the 90 days trading horizon iShares Trust is expected to generate 1.31 times more return on investment than Honeywell International. However, IShares Trust is 1.31 times more volatile than Honeywell International. It trades about -0.09 of its potential returns per unit of risk. Honeywell International is currently generating about -0.12 per unit of risk. If you would invest 183,684 in iShares Trust on September 23, 2024 and sell it today you would lose (3,584) from holding iShares Trust or give up 1.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
iShares Trust vs. Honeywell International
Performance |
| Timeline |
| iShares Trust |
| Honeywell International |
IShares Trust and Honeywell International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Honeywell International
The main advantage of trading using opposite IShares Trust and Honeywell International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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.| IShares Trust vs. Vanguard Index Funds | IShares Trust vs. Vanguard Index Funds | IShares Trust vs. Vanguard STAR Funds | IShares Trust vs. SPDR SP 500 |
| Honeywell International vs. Micron Technology | Honeywell International vs. United States Steel | Honeywell International vs. Cognizant Technology Solutions | Honeywell International vs. DXC Technology |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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