Correlation Between HNI Corp and JOHNSON

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

By analyzing existing cross correlation between HNI Corp and JOHNSON JOHNSON 585, you can compare the effects of market volatilities on HNI Corp and JOHNSON 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 JOHNSON. Check out your portfolio center. Please also check ongoing floating volatility patterns of HNI Corp and JOHNSON.

Diversification Opportunities for HNI Corp and JOHNSON

-0.55

Correlation Coefficient

HNI Corp  JOHNSON

Excellent diversification

The 3 months correlation between HNI and JOHNSON is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding HNI Corp and JOHNSON JOHNSON 585 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JOHNSON JOHNSON 585 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 JOHNSON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JOHNSON JOHNSON 585 has no effect on the direction of HNI Corp i.e., HNI Corp and JOHNSON go up and down completely randomly.

Pair Corralation between HNI Corp and JOHNSON

Considering the 90-day investment horizon HNI Corp is expected to under-perform the JOHNSON. In addition to that, HNI Corp is 2.35 times more volatile than JOHNSON JOHNSON 585. It trades about -0.09 of its total potential returns per unit of risk. JOHNSON JOHNSON 585 is currently generating about 0.02 per unit of volatility. If you would invest  10,689  in JOHNSON JOHNSON 585 on December 27, 2024 and sell it today you would earn a total of  94.00  from holding JOHNSON JOHNSON 585 or generate 0.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.72%
Values	Daily Returns

HNI Corp  vs.  JOHNSON JOHNSON 585

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 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.

JOHNSON JOHNSON 585

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JOHNSON JOHNSON 585 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, JOHNSON is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HNI Corp and JOHNSON

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

The idea behind HNI Corp and JOHNSON JOHNSON 585 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 Commodity Directory module to find actively traded commodities issued by global exchanges.