Correlation Between Honeywell International and QuantumKore
Can any of the company-specific risk be diversified away by investing in both Honeywell International and QuantumKore 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 QuantumKore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honeywell International and QuantumKore, you can compare the effects of market volatilities on Honeywell International and QuantumKore 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 QuantumKore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honeywell International and QuantumKore.
Diversification Opportunities for Honeywell International and QuantumKore
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Honeywell and QuantumKore is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Honeywell International and QuantumKore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QuantumKore 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 QuantumKore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QuantumKore has no effect on the direction of Honeywell International i.e., Honeywell International and QuantumKore go up and down completely randomly.
Pair Corralation between Honeywell International and QuantumKore
Considering the 90-day investment horizon Honeywell International is expected to generate 73.32 times less return on investment than QuantumKore. But when comparing it to its historical volatility, Honeywell International is 74.09 times less risky than QuantumKore. It trades about 0.1 of its potential returns per unit of risk. QuantumKore is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3.00 in QuantumKore on September 1, 2024 and sell it today you would earn a total of 74.00 from holding QuantumKore or generate 2466.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Honeywell International vs. QuantumKore
Performance |
| Timeline |
| Honeywell International |
| QuantumKore |
Honeywell International and QuantumKore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Honeywell International and QuantumKore
The main advantage of trading using opposite Honeywell International and QuantumKore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honeywell International position performs unexpectedly, QuantumKore 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 QuantumKore will offset losses from the drop in QuantumKore's long position.The idea behind Honeywell International and QuantumKore pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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