Correlation Between Honeywell International and WSDMTR ERNGS
Can any of the company-specific risk be diversified away by investing in both Honeywell International and WSDMTR ERNGS 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 WSDMTR ERNGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honeywell International and WSDMTR ERNGS 500, you can compare the effects of market volatilities on Honeywell International and WSDMTR ERNGS 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 WSDMTR ERNGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honeywell International and WSDMTR ERNGS.
Diversification Opportunities for Honeywell International and WSDMTR ERNGS
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Honeywell and WSDMTR is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Honeywell International and WSDMTR ERNGS 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WSDMTR ERNGS 500 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 WSDMTR ERNGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WSDMTR ERNGS 500 has no effect on the direction of Honeywell International i.e., Honeywell International and WSDMTR ERNGS go up and down completely randomly.
Pair Corralation between Honeywell International and WSDMTR ERNGS
Assuming the 90 days trading horizon Honeywell International is expected to generate 1.51 times more return on investment than WSDMTR ERNGS. However, Honeywell International is 1.51 times more volatile than WSDMTR ERNGS 500. It trades about 0.06 of its potential returns per unit of risk. WSDMTR ERNGS 500 is currently generating about -0.23 per unit of risk. If you would invest 427,467 in Honeywell International on December 11, 2024 and sell it today you would earn a total of 6,751 from holding Honeywell International or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Honeywell International vs. WSDMTR ERNGS 500
Performance |
| Timeline |
| Honeywell International |
| WSDMTR ERNGS 500 |
Honeywell International and WSDMTR ERNGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Honeywell International and WSDMTR ERNGS
The main advantage of trading using opposite Honeywell International and WSDMTR ERNGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honeywell International position performs unexpectedly, WSDMTR ERNGS 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 WSDMTR ERNGS will offset losses from the drop in WSDMTR ERNGS's long position.| Honeywell International vs. Micron Technology | Honeywell International vs. FibraHotel | Honeywell International vs. Costco Wholesale | Honeywell International vs. Verizon Communications |
| WSDMTR ERNGS vs. Vanguard Index Funds | WSDMTR ERNGS vs. Vanguard SP 500 | WSDMTR ERNGS vs. Vanguard STAR Funds | WSDMTR ERNGS vs. SPDR SP 500 |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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