Correlation Between PAX Global and HNI

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

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

Diversification Opportunities for PAX Global and HNI

0.08

Correlation Coefficient

PAX Global  HNI

Significant diversification

The 3 months correlation between PAX and HNI is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding PAX Global Technology and HNI Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HNI Corporation and PAX Global 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 PAX Global Technology are associated (or correlated) with HNI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HNI Corporation has no effect on the direction of PAX Global i.e., PAX Global and HNI go up and down completely randomly.

Pair Corralation between PAX Global and HNI

Assuming the 90 days horizon PAX Global Technology is expected to generate 1.72 times more return on investment than HNI. However, PAX Global is 1.72 times more volatile than HNI Corporation. It trades about -0.02 of its potential returns per unit of risk. HNI Corporation is currently generating about -0.17 per unit of risk. If you would invest  61.00  in PAX Global Technology on December 26, 2024 and sell it today you would lose (4.00) from holding PAX Global Technology or give up 6.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

PAX Global Technology  vs.  HNI Corp.

PAX Global Technology

Risk-Adjusted Performance

Very Weak

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

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.

Pair Trading with PAX Global and HNI

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

The idea behind PAX Global Technology and HNI Corporation 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..