Correlation Between HONEYWELL CDR and Knight Therapeutics
Can any of the company-specific risk be diversified away by investing in both HONEYWELL CDR and Knight Therapeutics 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 CDR and Knight Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HONEYWELL CDR and Knight Therapeutics, you can compare the effects of market volatilities on HONEYWELL CDR and Knight Therapeutics 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 CDR with a short position of Knight Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of HONEYWELL CDR and Knight Therapeutics.
Diversification Opportunities for HONEYWELL CDR and Knight Therapeutics
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HONEYWELL and Knight is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding HONEYWELL CDR and Knight Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knight Therapeutics and HONEYWELL CDR 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 CDR are associated (or correlated) with Knight Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knight Therapeutics has no effect on the direction of HONEYWELL CDR i.e., HONEYWELL CDR and Knight Therapeutics go up and down completely randomly.
Pair Corralation between HONEYWELL CDR and Knight Therapeutics
Assuming the 90 days trading horizon HONEYWELL CDR is expected to under-perform the Knight Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, HONEYWELL CDR is 1.01 times less risky than Knight Therapeutics. The stock trades about -0.03 of its potential returns per unit of risk. The Knight Therapeutics is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 537.00 in Knight Therapeutics on November 4, 2024 and sell it today you would earn a total of 17.00 from holding Knight Therapeutics or generate 3.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HONEYWELL CDR vs. Knight Therapeutics
Performance |
| Timeline |
| HONEYWELL CDR |
| Knight Therapeutics |
HONEYWELL CDR and Knight Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HONEYWELL CDR and Knight Therapeutics
The main advantage of trading using opposite HONEYWELL CDR and Knight Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HONEYWELL CDR position performs unexpectedly, Knight Therapeutics 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 Knight Therapeutics will offset losses from the drop in Knight Therapeutics' long position.| HONEYWELL CDR vs. Fairfax Financial Holdings | HONEYWELL CDR vs. Fairfax Financial Holdings | HONEYWELL CDR vs. Fairfax Financial Holdings | HONEYWELL CDR vs. Fairfax Financial Holdings |
| Knight Therapeutics vs. Stella Jones | Knight Therapeutics vs. Richelieu Hardware | Knight Therapeutics vs. Element Fleet Management | Knight Therapeutics vs. ECN Capital Corp |
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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