Correlation Between Mitsubishi Heavy and Honeywell International
Can any of the company-specific risk be diversified away by investing in both Mitsubishi Heavy 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 Mitsubishi Heavy and Honeywell International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsubishi Heavy Industries and Honeywell International, you can compare the effects of market volatilities on Mitsubishi Heavy 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 Mitsubishi Heavy with a short position of Honeywell International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Heavy and Honeywell International.
Diversification Opportunities for Mitsubishi Heavy and Honeywell International
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mitsubishi and Honeywell is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Heavy Industries and Honeywell International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell International and Mitsubishi Heavy 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 Mitsubishi Heavy Industries 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 Mitsubishi Heavy i.e., Mitsubishi Heavy and Honeywell International go up and down completely randomly.
Pair Corralation between Mitsubishi Heavy and Honeywell International
Assuming the 90 days horizon Mitsubishi Heavy Industries is expected to generate 2.78 times more return on investment than Honeywell International. However, Mitsubishi Heavy is 2.78 times more volatile than Honeywell International. It trades about 0.15 of its potential returns per unit of risk. Honeywell International is currently generating about -0.06 per unit of risk. If you would invest 865.00 in Mitsubishi Heavy Industries on January 17, 2024 and sell it today you would earn a total of 69.00 from holding Mitsubishi Heavy Industries or generate 7.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi Heavy Industries vs. Honeywell International
Performance |
| Timeline |
| Mitsubishi Heavy Ind |
| Honeywell International |
Mitsubishi Heavy and Honeywell International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi Heavy and Honeywell International
The main advantage of trading using opposite Mitsubishi Heavy and Honeywell International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi Heavy 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.| Mitsubishi Heavy vs. GE Aerospace | Mitsubishi Heavy vs. Eaton PLC | Mitsubishi Heavy vs. Illinois Tool Works | Mitsubishi Heavy vs. Parker Hannifin |
| Honeywell International vs. MDU Resources Group | Honeywell International vs. Valmont Industries | Honeywell International vs. Griffon | Honeywell International vs. Compass Diversified Holdings |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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