Correlation Between HNI Corp and KEYCORP

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

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

Diversification Opportunities for HNI Corp and KEYCORP

0.46

Correlation Coefficient

HNI Corp  KEYCORP

Very weak diversification

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

Pair Corralation between HNI Corp and KEYCORP

Considering the 90-day investment horizon HNI Corp is expected to under-perform the KEYCORP. But the stock apears to be less risky and, when comparing its historical volatility, HNI Corp is 2.21 times less risky than KEYCORP. The stock trades about -0.18 of its potential returns per unit of risk. The KEYCORP MTN is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  8,901  in KEYCORP MTN on October 7, 2024 and sell it today you would lose (901.00) from holding KEYCORP MTN or give up 10.12% of portfolio value over 90 days.

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

HNI Corp  vs.  KEYCORP MTN

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 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.

KEYCORP MTN

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with HNI Corp and KEYCORP

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

The idea behind HNI Corp and KEYCORP MTN 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.