Correlation Between HNI Corp and NI Holdings
Can any of the company-specific risk be diversified away by investing in both HNI Corp and NI Holdings 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 NI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HNI Corp and NI Holdings, you can compare the effects of market volatilities on HNI Corp and NI Holdings 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 NI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of HNI Corp and NI Holdings.
Diversification Opportunities for HNI Corp and NI Holdings
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HNI and NODK is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding HNI Corp and NI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NI Holdings 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 NI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NI Holdings has no effect on the direction of HNI Corp i.e., HNI Corp and NI Holdings go up and down completely randomly.
Pair Corralation between HNI Corp and NI Holdings
Considering the 90-day investment horizon HNI Corp is expected to under-perform the NI Holdings. But the stock apears to be less risky and, when comparing its historical volatility, HNI Corp is 1.4 times less risky than NI Holdings. The stock trades about -0.13 of its potential returns per unit of risk. The NI Holdings is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,573 in NI Holdings on September 12, 2024 and sell it today you would earn a total of 128.00 from holding NI Holdings or generate 8.14% 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. NI Holdings
Performance |
| Timeline |
| HNI Corp |
| NI Holdings |
HNI Corp and NI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HNI Corp and NI Holdings
The main advantage of trading using opposite HNI Corp and NI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HNI Corp position performs unexpectedly, NI Holdings 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 NI Holdings will offset losses from the drop in NI Holdings' long position.The idea behind HNI Corp and NI Holdings 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.| NI Holdings vs. Horace Mann Educators | NI Holdings vs. Donegal Group A | NI Holdings vs. Global Indemnity PLC | NI Holdings vs. Selective Insurance Group |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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