Correlation Between HNI and Herman Miller

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

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

Diversification Opportunities for HNI and Herman Miller

0.48

Correlation Coefficient

HNI  Herman Miller

Very weak diversification

The 3 months correlation between HNI and Herman is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding HNI Corp. and Herman Miller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herman Miller 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 Herman Miller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herman Miller has no effect on the direction of HNI i.e., HNI and Herman Miller go up and down completely randomly.

Pair Corralation between HNI and Herman Miller

Assuming the 90 days horizon HNI Corporation is expected to under-perform the Herman Miller. But the stock apears to be less risky and, when comparing its historical volatility, HNI Corporation is 1.4 times less risky than Herman Miller. The stock trades about -0.09 of its potential returns per unit of risk. The Herman Miller is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,242  in Herman Miller on September 15, 2024 and sell it today you would earn a total of  98.00  from holding Herman Miller or generate 4.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

HNI Corp.  vs.  Herman Miller

HNI Corporation

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HNI Corporation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, HNI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Herman Miller

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Herman Miller has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Herman Miller 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 Herman Miller

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

The idea behind HNI Corporation and Herman Miller 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.