Correlation Between Honeywell International and Amcor PLC

Can any of the company-specific risk be diversified away by investing in both Honeywell International and Amcor PLC 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 Amcor PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Honeywell International and Amcor PLC, you can compare the effects of market volatilities on Honeywell International and Amcor PLC 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 Amcor PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honeywell International and Amcor PLC.

Diversification Opportunities for Honeywell International and Amcor PLC

0.69

Correlation Coefficient

Honeywell International  Amcor PLC

Poor diversification

The 3 months correlation between Honeywell and Amcor is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Honeywell International and Amcor PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amcor PLC 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 Amcor PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amcor PLC has no effect on the direction of Honeywell International i.e., Honeywell International and Amcor PLC go up and down completely randomly.

Pair Corralation between Honeywell International and Amcor PLC

Considering the 90-day investment horizon Honeywell International is expected to generate 1.3 times less return on investment than Amcor PLC. In addition to that, Honeywell International is 1.06 times more volatile than Amcor PLC. It trades about 0.05 of its total potential returns per unit of risk. Amcor PLC is currently generating about 0.07 per unit of volatility. If you would invest  898.00  in Amcor PLC on May 7, 2025 and sell it today you would earn a total of  42.00  from holding Amcor PLC or generate 4.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Honeywell International  vs.  Amcor PLC

Honeywell International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Honeywell International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Honeywell International is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Amcor PLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amcor PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Amcor PLC is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Honeywell International and Amcor PLC

The main advantage of trading using opposite Honeywell International and Amcor PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honeywell International position performs unexpectedly, Amcor PLC 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 Amcor PLC will offset losses from the drop in Amcor PLC's long position.

The idea behind Honeywell International and Amcor PLC 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.