Correlation Between HNI Corp and Globalfoundries

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Can any of the company-specific risk be diversified away by investing in both HNI Corp and Globalfoundries 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 Globalfoundries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HNI Corp and Globalfoundries, you can compare the effects of market volatilities on HNI Corp and Globalfoundries 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 Globalfoundries. Check out your portfolio center. Please also check ongoing floating volatility patterns of HNI Corp and Globalfoundries.

Diversification Opportunities for HNI Corp and Globalfoundries

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between HNI and Globalfoundries is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding HNI Corp and Globalfoundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globalfoundries 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 Globalfoundries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globalfoundries has no effect on the direction of HNI Corp i.e., HNI Corp and Globalfoundries go up and down completely randomly.

Pair Corralation between HNI Corp and Globalfoundries

Considering the 90-day investment horizon HNI Corp is expected to generate 0.6 times more return on investment than Globalfoundries. However, HNI Corp is 1.68 times less risky than Globalfoundries. It trades about 0.1 of its potential returns per unit of risk. Globalfoundries is currently generating about -0.02 per unit of risk. If you would invest  3,949  in HNI Corp on September 2, 2024 and sell it today you would earn a total of  1,716  from holding HNI Corp or generate 43.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

HNI Corp  vs.  Globalfoundries

 Performance 
       Timeline  
HNI Corp 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in HNI Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, HNI Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Globalfoundries 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Globalfoundries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Globalfoundries is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

HNI Corp and Globalfoundries Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HNI Corp and Globalfoundries

The main advantage of trading using opposite HNI Corp and Globalfoundries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HNI Corp position performs unexpectedly, Globalfoundries 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 Globalfoundries will offset losses from the drop in Globalfoundries' long position.
The idea behind HNI Corp and Globalfoundries 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.
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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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