Correlation Between BRC and HNI Corp
Can any of the company-specific risk be diversified away by investing in both BRC 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 BRC and HNI Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRC Inc and HNI Corp, you can compare the effects of market volatilities on BRC 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 BRC with a short position of HNI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRC and HNI Corp.
Diversification Opportunities for BRC and HNI Corp
Very good diversification
The 3 months correlation between BRC and HNI is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding BRC Inc and HNI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HNI Corp and BRC 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 BRC Inc 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 BRC i.e., BRC and HNI Corp go up and down completely randomly.
Pair Corralation between BRC and HNI Corp
Given the investment horizon of 90 days BRC Inc is expected to under-perform the HNI Corp. In addition to that, BRC is 1.96 times more volatile than HNI Corp. It trades about 0.0 of its total potential returns per unit of risk. HNI Corp is currently generating about 0.1 per unit of volatility. If you would invest 5,061 in HNI Corp on September 12, 2024 and sell it today you would earn a total of 461.00 from holding HNI Corp or generate 9.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRC Inc vs. HNI Corp
Performance |
| Timeline |
| BRC Inc |
| HNI Corp |
BRC and HNI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRC and HNI Corp
The main advantage of trading using opposite BRC and HNI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRC 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 BRC Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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