Correlation Between All American and HNI Corp

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

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

Diversification Opportunities for All American and HNI Corp

0.0

Correlation Coefficient

All American  HNI Corp

Pay attention - limited upside

The 3 months correlation between All and HNI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding All American Pet and HNI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HNI Corp and All American 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 All American Pet 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 All American i.e., All American and HNI Corp go up and down completely randomly.

Pair Corralation between All American and HNI Corp

Given the investment horizon of 90 days All American Pet is expected to generate 28.61 times more return on investment than HNI Corp. However, All American is 28.61 times more volatile than HNI Corp. It trades about 0.08 of its potential returns per unit of risk. HNI Corp is currently generating about 0.08 per unit of risk. If you would invest  0.03  in All American Pet on September 23, 2024 and sell it today you would lose (0.02) from holding All American Pet or give up 66.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

All American Pet  vs.  HNI Corp

All American Pet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days All American Pet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, All American is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private 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 fairly strong basic indicators, HNI Corp is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with All American and HNI Corp

The main advantage of trading using opposite All American and HNI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if All American 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 All American Pet 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.