Correlation Between Honeywell International and Metro Pacific
Can any of the company-specific risk be diversified away by investing in both Honeywell International and Metro Pacific 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 Honeywell International and Metro Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honeywell International and Metro Pacific Investments, you can compare the effects of market volatilities on Honeywell International and Metro Pacific 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 Honeywell International with a short position of Metro Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honeywell International and Metro Pacific.
Diversification Opportunities for Honeywell International and Metro Pacific
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Honeywell and Metro is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Honeywell International and Metro Pacific Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Pacific Investments and Honeywell International 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 Honeywell International are associated (or correlated) with Metro Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Pacific Investments has no effect on the direction of Honeywell International i.e., Honeywell International and Metro Pacific go up and down completely randomly.
Pair Corralation between Honeywell International and Metro Pacific
If you would invest 19,819 in Honeywell International on March 4, 2024 and sell it today you would earn a total of 400.00 from holding Honeywell International or generate 2.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 1.56% |
Values | Daily Returns |
Honeywell International vs. Metro Pacific Investments
Performance |
Timeline |
Honeywell International |
Metro Pacific Investments |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Honeywell International and Metro Pacific Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Honeywell International and Metro Pacific
The main advantage of trading using opposite Honeywell International and Metro Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honeywell International position performs unexpectedly, Metro Pacific 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 Metro Pacific will offset losses from the drop in Metro Pacific's long position.Honeywell International vs. MDU Resources Group | Honeywell International vs. Valmont Industries | Honeywell International vs. Griffon | Honeywell International vs. Compass Diversified Holdings |
Metro Pacific vs. Honeywell International | Metro Pacific vs. MDU Resources Group | Metro Pacific vs. Compass Diversified Holdings | Metro Pacific vs. Valmont Industries |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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