Correlation Between Canon and Herman Miller

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

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

Diversification Opportunities for Canon and Herman Miller

0.46

Correlation Coefficient

Canon  Herman Miller

Very weak diversification

The 3 months correlation between Canon and Herman is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Canon Inc and Herman Miller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herman Miller 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 Herman Miller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herman Miller has no effect on the direction of Canon i.e., Canon and Herman Miller go up and down completely randomly.

Pair Corralation between Canon and Herman Miller

Assuming the 90 days trading horizon Canon Inc is expected to generate 1.06 times more return on investment than Herman Miller. However, Canon is 1.06 times more volatile than Herman Miller. It trades about -0.03 of its potential returns per unit of risk. Herman Miller is currently generating about -0.17 per unit of risk. If you would invest  3,060  in Canon Inc on December 28, 2024 and sell it today you would lose (160.00) from holding Canon Inc or give up 5.23% of portfolio value over 90 days.

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

Canon Inc  vs.  Herman Miller

Canon Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Canon is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Herman Miller

Risk-Adjusted Performance

Very Weak

Over the last 90 days Herman Miller has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Canon and Herman Miller

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

The idea behind Canon Inc and Herman Miller 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..