Correlation Between Global Ship and HNI Corp
Can any of the company-specific risk be diversified away by investing in both Global Ship 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 Global Ship and HNI Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Ship Lease and HNI Corp, you can compare the effects of market volatilities on Global Ship 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 Global Ship with a short position of HNI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and HNI Corp.
Diversification Opportunities for Global Ship and HNI Corp
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Global and HNI is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and HNI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HNI Corp and Global Ship 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 Global Ship Lease 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 Global Ship i.e., Global Ship and HNI Corp go up and down completely randomly.
Pair Corralation between Global Ship and HNI Corp
Assuming the 90 days trading horizon Global Ship Lease is expected to under-perform the HNI Corp. But the preferred stock apears to be less risky and, when comparing its historical volatility, Global Ship Lease is 2.67 times less risky than HNI Corp. The preferred stock trades about -0.03 of its potential returns per unit of risk. The HNI Corp is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 4,988 in HNI Corp on August 30, 2024 and sell it today you would earn a total of 639.00 from holding HNI Corp or generate 12.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Ship Lease vs. HNI Corp
Performance |
| Timeline |
| Global Ship Lease |
| HNI Corp |
Global Ship and HNI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and HNI Corp
The main advantage of trading using opposite Global Ship and HNI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship 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 Global Ship Lease 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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