Correlation Between HNI and Canon

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

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

Diversification Opportunities for HNI and Canon

0.21

Correlation Coefficient

HNI  Canon

Modest diversification

The 3 months correlation between HNI and Canon is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding HNI Corp. and Canon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canon Inc 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 Canon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canon Inc has no effect on the direction of HNI i.e., HNI and Canon go up and down completely randomly.

Pair Corralation between HNI and Canon

Assuming the 90 days horizon HNI Corporation is expected to under-perform the Canon. But the stock apears to be less risky and, when comparing its historical volatility, HNI Corporation is 1.23 times less risky than Canon. The stock trades about -0.15 of its potential returns per unit of risk. The Canon Inc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,992  in Canon Inc on December 27, 2024 and sell it today you would lose (92.00) from holding Canon Inc or give up 3.07% 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.  Canon Inc

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.

Canon Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Canon is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HNI and Canon

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

The idea behind HNI Corporation and Canon Inc 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.