Correlation Between Honeywell International and Aeris Indstria
Can any of the company-specific risk be diversified away by investing in both Honeywell International and Aeris Indstria 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 Aeris Indstria into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honeywell International and Aeris Indstria e, you can compare the effects of market volatilities on Honeywell International and Aeris Indstria 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 Aeris Indstria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honeywell International and Aeris Indstria.
Diversification Opportunities for Honeywell International and Aeris Indstria
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Honeywell and Aeris is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Honeywell International and Aeris Indstria e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeris Indstria e 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 Aeris Indstria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeris Indstria e has no effect on the direction of Honeywell International i.e., Honeywell International and Aeris Indstria go up and down completely randomly.
Pair Corralation between Honeywell International and Aeris Indstria
Assuming the 90 days trading horizon Honeywell International is expected to generate 8.2 times less return on investment than Aeris Indstria. But when comparing it to its historical volatility, Honeywell International is 8.79 times less risky than Aeris Indstria. It trades about 0.21 of its potential returns per unit of risk. Aeris Indstria e is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 549.00 in Aeris Indstria e on September 20, 2024 and sell it today you would earn a total of 311.00 from holding Aeris Indstria e or generate 56.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Honeywell International vs. Aeris Indstria e
Performance |
| Timeline |
| Honeywell International |
| Aeris Indstria e |
Honeywell International and Aeris Indstria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Honeywell International and Aeris Indstria
The main advantage of trading using opposite Honeywell International and Aeris Indstria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honeywell International position performs unexpectedly, Aeris Indstria 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 Aeris Indstria will offset losses from the drop in Aeris Indstria's long position.| Honeywell International vs. Lloyds Banking Group | Honeywell International vs. Metalurgica Gerdau SA | Honeywell International vs. MAHLE Metal Leve | Honeywell International vs. Tres Tentos Agroindustrial |
| Aeris Indstria vs. Honeywell International | Aeris Indstria vs. General Electric | Aeris Indstria vs. Eaton plc | Aeris Indstria vs. Otis Worldwide |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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