Correlation Between Honeywell International and SentinelOne
Can any of the company-specific risk be diversified away by investing in both Honeywell International and SentinelOne 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 SentinelOne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honeywell International and SentinelOne, you can compare the effects of market volatilities on Honeywell International and SentinelOne 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 SentinelOne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honeywell International and SentinelOne.
Diversification Opportunities for Honeywell International and SentinelOne
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Honeywell and SentinelOne is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Honeywell International and SentinelOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SentinelOne 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 SentinelOne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SentinelOne has no effect on the direction of Honeywell International i.e., Honeywell International and SentinelOne go up and down completely randomly.
Pair Corralation between Honeywell International and SentinelOne
Assuming the 90 days trading horizon Honeywell International is expected to generate 0.55 times more return on investment than SentinelOne. However, Honeywell International is 1.81 times less risky than SentinelOne. It trades about -0.15 of its potential returns per unit of risk. SentinelOne is currently generating about -0.32 per unit of risk. If you would invest 334,600 in Honeywell International on January 20, 2024 and sell it today you would lose (11,516) from holding Honeywell International or give up 3.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Honeywell International vs. SentinelOne
Performance |
| Timeline |
| Honeywell International |
| SentinelOne |
Honeywell International and SentinelOne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Honeywell International and SentinelOne
The main advantage of trading using opposite Honeywell International and SentinelOne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honeywell International position performs unexpectedly, SentinelOne 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 SentinelOne will offset losses from the drop in SentinelOne's long position.| Honeywell International vs. McEwen Mining | Honeywell International vs. Hoteles City Express | Honeywell International vs. Air Transport Services | Honeywell International vs. KB Home |
| SentinelOne vs. Block Inc | SentinelOne vs. Adobe Systems Incorporated | SentinelOne vs. Crowdstrike Holdings | SentinelOne vs. Cloudflare |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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