Correlation Between Honeywell Automation and Life Insurance
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By analyzing existing cross correlation between Honeywell Automation India and Life Insurance, you can compare the effects of market volatilities on Honeywell Automation and Life Insurance 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 Automation with a short position of Life Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honeywell Automation and Life Insurance.
Diversification Opportunities for Honeywell Automation and Life Insurance
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Honeywell and Life is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Honeywell Automation India and Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Insurance and Honeywell Automation 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 Automation India are associated (or correlated) with Life Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Insurance has no effect on the direction of Honeywell Automation i.e., Honeywell Automation and Life Insurance go up and down completely randomly.
Pair Corralation between Honeywell Automation and Life Insurance
Assuming the 90 days trading horizon Honeywell Automation is expected to generate 5.28 times less return on investment than Life Insurance. But when comparing it to its historical volatility, Honeywell Automation India is 1.23 times less risky than Life Insurance. It trades about 0.01 of its potential returns per unit of risk. Life Insurance is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 57,029 in Life Insurance on November 19, 2024 and sell it today you would earn a total of 18,881 from holding Life Insurance or generate 33.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Honeywell Automation India vs. Life Insurance
Performance |
| Timeline |
| Honeywell Automation |
| Life Insurance |
Honeywell Automation and Life Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Honeywell Automation and Life Insurance
The main advantage of trading using opposite Honeywell Automation and Life Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honeywell Automation position performs unexpectedly, Life Insurance 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 Life Insurance will offset losses from the drop in Life Insurance's long position.The idea behind Honeywell Automation India and Life Insurance 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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