Correlation Between HNI Corp and Hawkins

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

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

Diversification Opportunities for HNI Corp and Hawkins

0.75

Correlation Coefficient

HNI Corp  Hawkins

Poor diversification

The 3 months correlation between HNI and Hawkins is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding HNI Corp and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins and HNI Corp 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 HNI Corp are associated (or correlated) with Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of HNI Corp i.e., HNI Corp and Hawkins go up and down completely randomly.

Pair Corralation between HNI Corp and Hawkins

Considering the 90-day investment horizon HNI Corp is expected to generate 0.46 times more return on investment than Hawkins. However, HNI Corp is 2.19 times less risky than Hawkins. It trades about -0.56 of its potential returns per unit of risk. Hawkins is currently generating about -0.28 per unit of risk. If you would invest  5,445  in HNI Corp on October 12, 2024 and sell it today you would lose (662.00) from holding HNI Corp or give up 12.16% of portfolio value over 90 days.

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

HNI Corp  vs.  Hawkins

HNI Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HNI Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Hawkins

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hawkins has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's forward-looking signals remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with HNI Corp and Hawkins

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

The idea behind HNI Corp and Hawkins 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.