Correlation Between Honeywell International and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Honeywell International and IShares Trust 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 IShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honeywell International and iShares Trust , you can compare the effects of market volatilities on Honeywell International and IShares Trust 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 IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honeywell International and IShares Trust.
Diversification Opportunities for Honeywell International and IShares Trust
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Honeywell and IShares is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Honeywell International and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust 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 IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Honeywell International i.e., Honeywell International and IShares Trust go up and down completely randomly.
Pair Corralation between Honeywell International and IShares Trust
Assuming the 90 days trading horizon Honeywell International is expected to under-perform the IShares Trust. But the stock apears to be less risky and, when comparing its historical volatility, Honeywell International is 1.19 times less risky than IShares Trust. The stock trades about -0.12 of its potential returns per unit of risk. The iShares Trust is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 324,969 in iShares Trust on September 23, 2024 and sell it today you would earn a total of 243.00 from holding iShares Trust or generate 0.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Honeywell International vs. iShares Trust
Performance |
| Timeline |
| Honeywell International |
| iShares Trust |
Honeywell International and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Honeywell International and IShares Trust
The main advantage of trading using opposite Honeywell International and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honeywell International position performs unexpectedly, IShares Trust 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 IShares Trust will offset losses from the drop in IShares Trust's long position.| Honeywell International vs. Micron Technology | Honeywell International vs. United States Steel | Honeywell International vs. Cognizant Technology Solutions | Honeywell International vs. DXC Technology |
| IShares Trust vs. Vanguard Index Funds | IShares Trust vs. Vanguard Index Funds | IShares Trust vs. Vanguard STAR Funds | IShares Trust 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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