Correlation Between Marubeni and Honeywell International
Can any of the company-specific risk be diversified away by investing in both Marubeni and Honeywell International 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 Marubeni and Honeywell International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marubeni and Honeywell International, you can compare the effects of market volatilities on Marubeni and Honeywell International 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 Marubeni with a short position of Honeywell International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marubeni and Honeywell International.
Diversification Opportunities for Marubeni and Honeywell International
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Marubeni and Honeywell is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Marubeni and Honeywell International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell International and Marubeni 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 Marubeni are associated (or correlated) with Honeywell International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honeywell International has no effect on the direction of Marubeni i.e., Marubeni and Honeywell International go up and down completely randomly.
Pair Corralation between Marubeni and Honeywell International
Assuming the 90 days horizon Marubeni is expected to generate 1.04 times less return on investment than Honeywell International. In addition to that, Marubeni is 3.0 times more volatile than Honeywell International. It trades about 0.15 of its total potential returns per unit of risk. Honeywell International is currently generating about 0.45 per unit of volatility. If you would invest 20,467 in Honeywell International on September 1, 2024 and sell it today you would earn a total of 2,826 from holding Honeywell International or generate 13.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Marubeni vs. Honeywell International
Performance |
| Timeline |
| Marubeni |
| Honeywell International |
Marubeni and Honeywell International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marubeni and Honeywell International
The main advantage of trading using opposite Marubeni and Honeywell International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marubeni position performs unexpectedly, Honeywell International 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 Honeywell International will offset losses from the drop in Honeywell International's long position.The idea behind Marubeni and Honeywell International 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.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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