Correlation Between Promotora and Honeywell International
Can any of the company-specific risk be diversified away by investing in both Promotora 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 Promotora and Honeywell International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Promotora y Operadora and Honeywell International, you can compare the effects of market volatilities on Promotora 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 Promotora with a short position of Honeywell International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Promotora and Honeywell International.
Diversification Opportunities for Promotora and Honeywell International
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Promotora and Honeywell is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Promotora y Operadora and Honeywell International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell International and Promotora 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 Promotora y Operadora 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 Promotora i.e., Promotora and Honeywell International go up and down completely randomly.
Pair Corralation between Promotora and Honeywell International
Assuming the 90 days trading horizon Promotora y Operadora is expected to generate 1.27 times more return on investment than Honeywell International. However, Promotora is 1.27 times more volatile than Honeywell International. It trades about 0.02 of its potential returns per unit of risk. Honeywell International is currently generating about 0.03 per unit of risk. If you would invest 15,417 in Promotora y Operadora on September 19, 2024 and sell it today you would earn a total of 2,293 from holding Promotora y Operadora or generate 14.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Promotora y Operadora vs. Honeywell International
Performance |
| Timeline |
| Promotora y Operadora |
| Honeywell International |
Promotora and Honeywell International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Promotora and Honeywell International
The main advantage of trading using opposite Promotora and Honeywell International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Promotora 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.| Promotora vs. Gruma SAB de | Promotora vs. Grupo Aeroportuario del | Promotora vs. Grupo Aeroportuario del | Promotora vs. Grupo Aeroportuario del |
| Honeywell International vs. 3M Company | Honeywell International vs. Emerson Electric Co | Honeywell International vs. The Select Sector | Honeywell International vs. Promotora y Operadora |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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