Correlation Between Emeren and Honeywell International
Can any of the company-specific risk be diversified away by investing in both Emeren 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 Emeren and Honeywell International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emeren Group and Honeywell International, you can compare the effects of market volatilities on Emeren 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 Emeren with a short position of Honeywell International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emeren and Honeywell International.
Diversification Opportunities for Emeren and Honeywell International
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Emeren and Honeywell is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Emeren Group and Honeywell International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell International and Emeren 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 Emeren Group 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 Emeren i.e., Emeren and Honeywell International go up and down completely randomly.
Pair Corralation between Emeren and Honeywell International
Considering the 90-day investment horizon Emeren Group is expected to under-perform the Honeywell International. In addition to that, Emeren is 3.44 times more volatile than Honeywell International. It trades about -0.11 of its total potential returns per unit of risk. Honeywell International is currently generating about 0.09 per unit of volatility. If you would invest 22,414 in Honeywell International on September 12, 2024 and sell it today you would earn a total of 494.00 from holding Honeywell International or generate 2.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emeren Group vs. Honeywell International
Performance |
| Timeline |
| Emeren Group |
| Honeywell International |
Emeren and Honeywell International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emeren and Honeywell International
The main advantage of trading using opposite Emeren and Honeywell International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emeren 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.| Emeren vs. Canadian Solar | Emeren vs. Maxeon Solar Technologies | Emeren vs. SolarEdge Technologies | Emeren vs. Sunnova Energy International |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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