Correlation Between HNI Corp and Casella Waste
Can any of the company-specific risk be diversified away by investing in both HNI Corp and Casella Waste 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 Casella Waste into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HNI Corp and Casella Waste Systems, you can compare the effects of market volatilities on HNI Corp and Casella Waste 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 Casella Waste. Check out your portfolio center. Please also check ongoing floating volatility patterns of HNI Corp and Casella Waste.
Diversification Opportunities for HNI Corp and Casella Waste
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HNI and Casella is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding HNI Corp and Casella Waste Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casella Waste Systems 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 Casella Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Casella Waste Systems has no effect on the direction of HNI Corp i.e., HNI Corp and Casella Waste go up and down completely randomly.
Pair Corralation between HNI Corp and Casella Waste
Considering the 90-day investment horizon HNI Corp is expected to generate 1.23 times more return on investment than Casella Waste. However, HNI Corp is 1.23 times more volatile than Casella Waste Systems. It trades about 0.11 of its potential returns per unit of risk. Casella Waste Systems is currently generating about 0.09 per unit of risk. If you would invest 4,511 in HNI Corp on September 3, 2024 and sell it today you would earn a total of 1,154 from holding HNI Corp or generate 25.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HNI Corp vs. Casella Waste Systems
Performance |
| Timeline |
| HNI Corp |
| Casella Waste Systems |
HNI Corp and Casella Waste Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HNI Corp and Casella Waste
The main advantage of trading using opposite HNI Corp and Casella Waste positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HNI Corp position performs unexpectedly, Casella Waste 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 Casella Waste will offset losses from the drop in Casella Waste's long position.The idea behind HNI Corp and Casella Waste Systems 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.| Casella Waste vs. Clean Harbors | Casella Waste vs. Montrose Environmental Grp | Casella Waste vs. Republic Services | Casella Waste vs. Waste Connections |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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