Correlation Between ULTRA CLEAN and Honeywell International
Can any of the company-specific risk be diversified away by investing in both ULTRA CLEAN 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 ULTRA CLEAN and Honeywell International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ULTRA CLEAN HLDGS and Honeywell International, you can compare the effects of market volatilities on ULTRA CLEAN 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 ULTRA CLEAN with a short position of Honeywell International. Check out your portfolio center. Please also check ongoing floating volatility patterns of ULTRA CLEAN and Honeywell International.
Diversification Opportunities for ULTRA CLEAN and Honeywell International
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ULTRA and Honeywell is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding ULTRA CLEAN HLDGS and Honeywell International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell International and ULTRA CLEAN 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 ULTRA CLEAN HLDGS 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 ULTRA CLEAN i.e., ULTRA CLEAN and Honeywell International go up and down completely randomly.
Pair Corralation between ULTRA CLEAN and Honeywell International
Assuming the 90 days trading horizon ULTRA CLEAN is expected to generate 1.41 times less return on investment than Honeywell International. In addition to that, ULTRA CLEAN is 2.27 times more volatile than Honeywell International. It trades about 0.01 of its total potential returns per unit of risk. Honeywell International is currently generating about 0.04 per unit of volatility. If you would invest 17,729 in Honeywell International on October 31, 2024 and sell it today you would earn a total of 3,626 from holding Honeywell International or generate 20.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
ULTRA CLEAN HLDGS vs. Honeywell International
Performance |
| Timeline |
| ULTRA CLEAN HLDGS |
| Honeywell International |
ULTRA CLEAN and Honeywell International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ULTRA CLEAN and Honeywell International
The main advantage of trading using opposite ULTRA CLEAN and Honeywell International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ULTRA CLEAN 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.| ULTRA CLEAN vs. United Natural Foods | ULTRA CLEAN vs. Canadian Utilities Limited | ULTRA CLEAN vs. Corporate Travel Management | ULTRA CLEAN vs. Sims Metal Management |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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