Correlation Between HNI and Dow Jones
Can any of the company-specific risk be diversified away by investing in both HNI and Dow Jones 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 and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HNI Corporation and Dow Jones Industrial, you can compare the effects of market volatilities on HNI and Dow Jones 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 with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of HNI and Dow Jones.
Diversification Opportunities for HNI and Dow Jones
Poor diversification
The 3 months correlation between HNI and Dow is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding HNI Corp. and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and HNI 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 Corporation are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of HNI i.e., HNI and Dow Jones go up and down completely randomly.
Pair Corralation between HNI and Dow Jones
Assuming the 90 days horizon HNI Corporation is expected to generate 2.62 times more return on investment than Dow Jones. However, HNI is 2.62 times more volatile than Dow Jones Industrial. It trades about 0.08 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 2,545 in HNI Corporation on August 27, 2024 and sell it today you would earn a total of 2,605 from holding HNI Corporation or generate 102.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.22% |
| Values | Daily Returns |
HNI Corp. vs. Dow Jones Industrial
Performance |
| Timeline |
HNI and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
HNI Corporation
Pair trading matchups for HNI
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with HNI and Dow Jones
The main advantage of trading using opposite HNI and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HNI position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| HNI vs. Seven West Media | HNI vs. Ubisoft Entertainment SA | HNI vs. PARKEN Sport Entertainment | HNI vs. LION ONE METALS |
| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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