Correlation Between Honeywell International and Altra Indtl

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Can any of the company-specific risk be diversified away by investing in both Honeywell International and Altra Indtl 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 Altra Indtl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honeywell International and Altra Indtl Mtn, you can compare the effects of market volatilities on Honeywell International and Altra Indtl 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 Altra Indtl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honeywell International and Altra Indtl.

Diversification Opportunities for Honeywell International and Altra Indtl

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Honeywell and Altra is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Honeywell International and Altra Indtl Mtn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altra Indtl Mtn 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 Altra Indtl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altra Indtl Mtn has no effect on the direction of Honeywell International i.e., Honeywell International and Altra Indtl go up and down completely randomly.

Pair Corralation between Honeywell International and Altra Indtl

Considering the 90-day investment horizon Honeywell International is expected to generate 0.54 times more return on investment than Altra Indtl. However, Honeywell International is 1.84 times less risky than Altra Indtl. It trades about -0.19 of its potential returns per unit of risk. Altra Indtl Mtn is currently generating about -0.14 per unit of risk. If you would invest  19,044  in Honeywell International on June 28, 2022 and sell it today you would lose (2,037)  from holding Honeywell International or give up 10.7% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Honeywell International  vs.  Altra Indtl Mtn

 Performance (%) 
       Timeline  
Honeywell International 
Honeywell Performance
0 of 100
Over the last 90 days Honeywell International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Honeywell International is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Honeywell Price Channel

Altra Indtl Mtn 
Altra Performance
0 of 100
Over the last 90 days Altra Indtl Mtn has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Altra Indtl is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Altra Price Channel

Honeywell International and Altra Indtl Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Honeywell International and Altra Indtl

The main advantage of trading using opposite Honeywell International and Altra Indtl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honeywell International position performs unexpectedly, Altra Indtl 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 Altra Indtl will offset losses from the drop in Altra Indtl's long position.
Honeywell International vs. Clearwater Paper Corp
The idea behind Honeywell International and Altra Indtl Mtn 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.
Altra Indtl vs. Clearwater Paper Corp
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 Bond Directory module to find actively traded corporate debentures issued by US companies.

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