Correlation Between Canon and HNI

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

By analyzing existing cross correlation between Canon Inc and HNI Corporation, you can compare the effects of market volatilities on Canon and HNI 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 Canon with a short position of HNI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canon and HNI.

Diversification Opportunities for Canon and HNI

0.59

Correlation Coefficient

Canon  HNI

Very weak diversification

The 3 months correlation between Canon and HNI is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Canon Inc and HNI Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HNI Corporation and Canon 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 Canon Inc are associated (or correlated) with HNI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HNI Corporation has no effect on the direction of Canon i.e., Canon and HNI go up and down completely randomly.

Pair Corralation between Canon and HNI

Assuming the 90 days trading horizon Canon is expected to generate 2.13 times less return on investment than HNI. In addition to that, Canon is 1.11 times more volatile than HNI Corporation. It trades about 0.04 of its total potential returns per unit of risk. HNI Corporation is currently generating about 0.09 per unit of volatility. If you would invest  4,630  in HNI Corporation on September 14, 2024 and sell it today you would earn a total of  420.00  from holding HNI Corporation or generate 9.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Canon Inc  vs.  HNI Corp.

Canon Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canon Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Canon is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

HNI Corporation

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HNI Corporation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, HNI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Canon and HNI

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

The idea behind Canon Inc and HNI Corporation 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.