Correlation Between HNI Corp and M3 Brigade

Can any of the company-specific risk be diversified away by investing in both HNI Corp and M3 Brigade 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 M3 Brigade into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HNI Corp and M3 Brigade Acquisition V, you can compare the effects of market volatilities on HNI Corp and M3 Brigade 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 M3 Brigade. Check out your portfolio center. Please also check ongoing floating volatility patterns of HNI Corp and M3 Brigade.

Diversification Opportunities for HNI Corp and M3 Brigade

-0.78

Correlation Coefficient

HNI Corp  M3 Brigade

Pay attention - limited upside

The 3 months correlation between HNI and MBAV is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding HNI Corp and M3 Brigade Acquisition V in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M3 Brigade Acquisition 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 M3 Brigade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M3 Brigade Acquisition has no effect on the direction of HNI Corp i.e., HNI Corp and M3 Brigade go up and down completely randomly.

Pair Corralation between HNI Corp and M3 Brigade

Considering the 90-day investment horizon HNI Corp is expected to under-perform the M3 Brigade. In addition to that, HNI Corp is 21.21 times more volatile than M3 Brigade Acquisition V. It trades about -0.19 of its total potential returns per unit of risk. M3 Brigade Acquisition V is currently generating about 0.27 per unit of volatility. If you would invest  1,005  in M3 Brigade Acquisition V on December 16, 2024 and sell it today you would earn a total of  14.00  from holding M3 Brigade Acquisition V or generate 1.39% return on investment over 90 days.

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

HNI Corp  vs.  M3 Brigade Acquisition V

HNI Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days HNI Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

M3 Brigade Acquisition

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in M3 Brigade Acquisition V are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, M3 Brigade is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with HNI Corp and M3 Brigade

The main advantage of trading using opposite HNI Corp and M3 Brigade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HNI Corp position performs unexpectedly, M3 Brigade 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 M3 Brigade will offset losses from the drop in M3 Brigade's long position.

The idea behind HNI Corp and M3 Brigade Acquisition V 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.