Correlation Between HNI Corp and Alpha One
Can any of the company-specific risk be diversified away by investing in both HNI Corp and Alpha One 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 HNI Corp and Alpha One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HNI Corp and Alpha One, you can compare the effects of market volatilities on HNI Corp and Alpha One 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 HNI Corp with a short position of Alpha One. Check out your portfolio center. Please also check ongoing floating volatility patterns of HNI Corp and Alpha One.
Diversification Opportunities for HNI Corp and Alpha One
Poor diversification
The 3 months correlation between HNI and Alpha is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding HNI Corp and Alpha One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha One and HNI Corp 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 HNI Corp are associated (or correlated) with Alpha One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha One has no effect on the direction of HNI Corp i.e., HNI Corp and Alpha One go up and down completely randomly.
Pair Corralation between HNI Corp and Alpha One
Considering the 90-day investment horizon HNI Corp is expected to generate 0.5 times more return on investment than Alpha One. However, HNI Corp is 1.98 times less risky than Alpha One. It trades about 0.07 of its potential returns per unit of risk. Alpha One is currently generating about 0.02 per unit of risk. If you would invest 3,802 in HNI Corp on October 21, 2024 and sell it today you would earn a total of 1,283 from holding HNI Corp or generate 33.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.31% |
| Values | Daily Returns |
HNI Corp vs. Alpha One
Performance |
| Timeline |
| HNI Corp |
| Alpha One |
HNI Corp and Alpha One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HNI Corp and Alpha One
The main advantage of trading using opposite HNI Corp and Alpha One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HNI Corp position performs unexpectedly, Alpha One 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 Alpha One will offset losses from the drop in Alpha One's long position.The idea behind HNI Corp and Alpha One 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.| Alpha One vs. Mesa Air Group | Alpha One vs. HNI Corp | Alpha One vs. Altair Engineering | Alpha One vs. AerSale Corp |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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