Correlation Between Honeywell International and Bio Techne
Can any of the company-specific risk be diversified away by investing in both Honeywell International and Bio Techne 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 Bio Techne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honeywell International and Bio Techne, you can compare the effects of market volatilities on Honeywell International and Bio Techne 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 Bio Techne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honeywell International and Bio Techne.
Diversification Opportunities for Honeywell International and Bio Techne
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Honeywell and Bio is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Honeywell International and Bio Techne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Techne 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 Bio Techne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Techne has no effect on the direction of Honeywell International i.e., Honeywell International and Bio Techne go up and down completely randomly.
Pair Corralation between Honeywell International and Bio Techne
Assuming the 90 days trading horizon Honeywell International is expected to generate 2.64 times less return on investment than Bio Techne. But when comparing it to its historical volatility, Honeywell International is 5.81 times less risky than Bio Techne. It trades about 0.13 of its potential returns per unit of risk. Bio Techne is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 970.00 in Bio Techne on September 4, 2024 and sell it today you would earn a total of 338.00 from holding Bio Techne or generate 34.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.93% |
| Values | Daily Returns |
Honeywell International vs. Bio Techne
Performance |
| Timeline |
| Honeywell International |
| Bio Techne |
Honeywell International and Bio Techne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Honeywell International and Bio Techne
The main advantage of trading using opposite Honeywell International and Bio Techne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honeywell International position performs unexpectedly, Bio Techne 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 Bio Techne will offset losses from the drop in Bio Techne's long position.| Honeywell International vs. Telecomunicaes Brasileiras SA | Honeywell International vs. G2D Investments | Honeywell International vs. Broadcom | Honeywell International vs. Verizon Communications |
| Bio Techne vs. Raytheon Technologies | Bio Techne vs. MAHLE Metal Leve | Bio Techne vs. Multilaser Industrial SA | Bio Techne vs. Charter Communications |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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