Correlation Between CAPITAL and HNI Corp

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

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

Diversification Opportunities for CAPITAL and HNI Corp

0.36

Correlation Coefficient

CAPITAL  HNI Corp

Weak diversification

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

Pair Corralation between CAPITAL and HNI Corp

Assuming the 90 days trading horizon CAPITAL ONE FINL is expected to under-perform the HNI Corp. But the bond apears to be less risky and, when comparing its historical volatility, CAPITAL ONE FINL is 4.88 times less risky than HNI Corp. The bond trades about -0.01 of its potential returns per unit of risk. The HNI Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,776  in HNI Corp on October 10, 2024 and sell it today you would earn a total of  2,004  from holding HNI Corp or generate 72.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

CAPITAL ONE FINL  vs.  HNI Corp

CAPITAL ONE FINL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAPITAL ONE FINL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CAPITAL is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 latest fragile performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with CAPITAL and HNI Corp

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

The idea behind CAPITAL ONE FINL and HNI Corp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.