Correlation Between GAMCO Global and HNI Corp

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

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

Diversification Opportunities for GAMCO Global and HNI Corp

-0.48

Correlation Coefficient

GAMCO Global  HNI Corp

Very good diversification

The 3 months correlation between GAMCO and HNI is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding GAMCO Global Gold and HNI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HNI Corp and GAMCO Global 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 GAMCO Global Gold are associated (or correlated) with HNI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HNI Corp has no effect on the direction of GAMCO Global i.e., GAMCO Global and HNI Corp go up and down completely randomly.

Pair Corralation between GAMCO Global and HNI Corp

Assuming the 90 days trading horizon GAMCO Global Gold is expected to under-perform the HNI Corp. But the preferred stock apears to be less risky and, when comparing its historical volatility, GAMCO Global Gold is 1.45 times less risky than HNI Corp. The preferred stock trades about -0.15 of its potential returns per unit of risk. The HNI Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5,222  in HNI Corp on September 17, 2024 and sell it today you would earn a total of  234.50  from holding HNI Corp or generate 4.49% return on investment over 90 days.

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

GAMCO Global Gold  vs.  HNI Corp

GAMCO Global Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMCO Global Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Preferred Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

HNI Corp

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HNI Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, HNI Corp is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with GAMCO Global and HNI Corp

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

The idea behind GAMCO Global Gold and HNI Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.