Correlation Between HNI Corp and Brother Industries
Can any of the company-specific risk be diversified away by investing in both HNI Corp and Brother Industries 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 Brother Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HNI Corp and Brother Industries Ltd, you can compare the effects of market volatilities on HNI Corp and Brother Industries 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 Brother Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of HNI Corp and Brother Industries.
Diversification Opportunities for HNI Corp and Brother Industries
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between HNI and Brother is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding HNI Corp and Brother Industries Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brother Industries 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 Brother Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brother Industries has no effect on the direction of HNI Corp i.e., HNI Corp and Brother Industries go up and down completely randomly.
Pair Corralation between HNI Corp and Brother Industries
Considering the 90-day investment horizon HNI Corp is expected to generate 0.75 times more return on investment than Brother Industries. However, HNI Corp is 1.34 times less risky than Brother Industries. It trades about 0.0 of its potential returns per unit of risk. Brother Industries Ltd is currently generating about -0.3 per unit of risk. If you would invest 5,093 in HNI Corp on October 20, 2024 and sell it today you would lose (8.00) from holding HNI Corp or give up 0.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HNI Corp vs. Brother Industries Ltd
Performance |
| Timeline |
| HNI Corp |
| Brother Industries |
HNI Corp and Brother Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HNI Corp and Brother Industries
The main advantage of trading using opposite HNI Corp and Brother Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HNI Corp position performs unexpectedly, Brother Industries 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 Brother Industries will offset losses from the drop in Brother Industries' long position.The idea behind HNI Corp and Brother Industries Ltd 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.| Brother Industries vs. JBG SMITH Properties | Brother Industries vs. Live Ventures | Brother Industries vs. Utah Medical Products | Brother Industries vs. Addus HomeCare |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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