Correlation Between Mitsui and Honeywell International
Can any of the company-specific risk be diversified away by investing in both Mitsui 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 Mitsui and Honeywell International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsui Company and Honeywell International, you can compare the effects of market volatilities on Mitsui 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 Mitsui with a short position of Honeywell International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsui and Honeywell International.
Diversification Opportunities for Mitsui and Honeywell International
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mitsui and Honeywell is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Company and Honeywell International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell International and Mitsui 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 Mitsui Company 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 Mitsui i.e., Mitsui and Honeywell International go up and down completely randomly.
Pair Corralation between Mitsui and Honeywell International
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 | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Mitsui Company vs. Honeywell International
Performance |
| Timeline |
| Mitsui Company |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Honeywell International |
Mitsui and Honeywell International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsui and Honeywell International
The main advantage of trading using opposite Mitsui and Honeywell International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsui 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 Mitsui Company 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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