Correlation Between Honeywell International and Bank of Nova Scotia
Can any of the company-specific risk be diversified away by investing in both Honeywell International and Bank of Nova Scotia 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 Bank of Nova Scotia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honeywell International and The Bank of, you can compare the effects of market volatilities on Honeywell International and Bank of Nova Scotia 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 Bank of Nova Scotia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honeywell International and Bank of Nova Scotia.
Diversification Opportunities for Honeywell International and Bank of Nova Scotia
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Honeywell and Bank is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Honeywell International and The Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Nova Scotia 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 Bank of Nova Scotia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Nova Scotia has no effect on the direction of Honeywell International i.e., Honeywell International and Bank of Nova Scotia go up and down completely randomly.
Pair Corralation between Honeywell International and Bank of Nova Scotia
Assuming the 90 days trading horizon Honeywell International is expected to under-perform the Bank of Nova Scotia. In addition to that, Honeywell International is 5.8 times more volatile than The Bank of. It trades about -0.01 of its total potential returns per unit of risk. The Bank of is currently generating about 0.22 per unit of volatility. If you would invest 108,499 in The Bank of on October 19, 2024 and sell it today you would earn a total of 1,501 from holding The Bank of or generate 1.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Honeywell International vs. The Bank of
Performance |
| Timeline |
| Honeywell International |
| Bank of Nova Scotia |
Honeywell International and Bank of Nova Scotia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Honeywell International and Bank of Nova Scotia
The main advantage of trading using opposite Honeywell International and Bank of Nova Scotia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honeywell International position performs unexpectedly, Bank of Nova Scotia 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 Bank of Nova Scotia will offset losses from the drop in Bank of Nova Scotia's long position.| Honeywell International vs. The Bank of | Honeywell International vs. Hoteles City Express | Honeywell International vs. Grupo Hotelero Santa | Honeywell International vs. Martin Marietta Materials |
| Bank of Nova Scotia vs. Wells Fargo | Bank of Nova Scotia vs. HSBC Holdings plc | Bank of Nova Scotia vs. UBS Group AG | Bank of Nova Scotia vs. ING Groep NV |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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