Correlation Between HNI Corp and Wave Systems

Can any of the company-specific risk be diversified away by investing in both HNI Corp and Wave Systems 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 Wave Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HNI Corp and Wave Systems Corp, you can compare the effects of market volatilities on HNI Corp and Wave Systems 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 Wave Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of HNI Corp and Wave Systems.

Diversification Opportunities for HNI Corp and Wave Systems

0.0

Correlation Coefficient

HNI Corp  Wave Systems

Pay attention - limited upside

The 3 months correlation between HNI and Wave is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HNI Corp and Wave Systems Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wave Systems Corp 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 Wave Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wave Systems Corp has no effect on the direction of HNI Corp i.e., HNI Corp and Wave Systems go up and down completely randomly.

Pair Corralation between HNI Corp and Wave Systems

If you would invest  0.00  in Wave Systems Corp on February 1, 2024 and sell it today you would earn a total of  0.00  from holding Wave Systems Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

HNI Corp  vs.  Wave Systems Corp

HNI Corp

Risk-Adjusted Performance

2 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HNI Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, HNI Corp is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Wave Systems Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wave Systems Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Wave Systems is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HNI Corp and Wave Systems

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

The idea behind HNI Corp and Wave Systems Corp 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.