Correlation Between Honeywell International and Vanguard World
Can any of the company-specific risk be diversified away by investing in both Honeywell International and Vanguard World 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 Vanguard World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honeywell International and Vanguard World, you can compare the effects of market volatilities on Honeywell International and Vanguard World 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 Vanguard World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honeywell International and Vanguard World.
Diversification Opportunities for Honeywell International and Vanguard World
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Honeywell and Vanguard is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Honeywell International and Vanguard World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard World 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 Vanguard World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard World has no effect on the direction of Honeywell International i.e., Honeywell International and Vanguard World go up and down completely randomly.
Pair Corralation between Honeywell International and Vanguard World
Assuming the 90 days trading horizon Honeywell International is expected to generate 1.8 times more return on investment than Vanguard World. However, Honeywell International is 1.8 times more volatile than Vanguard World. It trades about 0.06 of its potential returns per unit of risk. Vanguard World is currently generating about -0.05 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. Vanguard World
Performance |
| Timeline |
| Honeywell International |
| Vanguard World |
Honeywell International and Vanguard World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Honeywell International and Vanguard World
The main advantage of trading using opposite Honeywell International and Vanguard World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honeywell International position performs unexpectedly, Vanguard World 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 Vanguard World will offset losses from the drop in Vanguard World's long position.| Honeywell International vs. Micron Technology | Honeywell International vs. FibraHotel | Honeywell International vs. Costco Wholesale | Honeywell International vs. Verizon Communications |
| Vanguard World vs. Vanguard Funds Public | Vanguard World vs. Vanguard Specialized Funds | Vanguard World vs. Vanguard World | Vanguard World vs. Vanguard Index Funds |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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