Correlation Between HNI and CDL INVESTMENT

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

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

Diversification Opportunities for HNI and CDL INVESTMENT

0.36

Correlation Coefficient

HNI  CDL INVESTMENT

Weak diversification

The 3 months correlation between HNI and CDL is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding HNI Corp. and CDL INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDL INVESTMENT and HNI 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 Corporation are associated (or correlated) with CDL INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDL INVESTMENT has no effect on the direction of HNI i.e., HNI and CDL INVESTMENT go up and down completely randomly.

Pair Corralation between HNI and CDL INVESTMENT

Assuming the 90 days horizon HNI Corporation is expected to under-perform the CDL INVESTMENT. But the stock apears to be less risky and, when comparing its historical volatility, HNI Corporation is 1.13 times less risky than CDL INVESTMENT. The stock trades about -0.17 of its potential returns per unit of risk. The CDL INVESTMENT is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  44.00  in CDL INVESTMENT on December 26, 2024 and sell it today you would lose (2.00) from holding CDL INVESTMENT or give up 4.55% of portfolio value over 90 days.

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

HNI Corp.  vs.  CDL INVESTMENT

HNI Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days HNI Corporation 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 nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CDL INVESTMENT

Risk-Adjusted Performance

Very Weak

Over the last 90 days CDL INVESTMENT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CDL INVESTMENT is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with HNI and CDL INVESTMENT

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

The idea behind HNI Corporation and CDL INVESTMENT 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.