Correlation Between CompX International and HNI Corp

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

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

Diversification Opportunities for CompX International and HNI Corp

0.67

Correlation Coefficient

CompX International  HNI Corp

Poor diversification

The 3 months correlation between CompX and HNI is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding CompX International and HNI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HNI Corp and CompX International 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 CompX International are associated (or correlated) with HNI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HNI Corp has no effect on the direction of CompX International i.e., CompX International and HNI Corp go up and down completely randomly.

Pair Corralation between CompX International and HNI Corp

Considering the 90-day investment horizon CompX International is expected to generate 2.2 times more return on investment than HNI Corp. However, CompX International is 2.2 times more volatile than HNI Corp. It trades about 0.02 of its potential returns per unit of risk. HNI Corp is currently generating about -0.15 per unit of risk. If you would invest  2,553  in CompX International on January 23, 2025 and sell it today you would earn a total of  10.00  from holding CompX International or generate 0.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

CompX International  vs.  HNI Corp

CompX International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CompX International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting forward indicators, CompX International may actually be approaching a critical reversion point that can send shares even higher in May 2025.

HNI Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days HNI Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with CompX International and HNI Corp

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

The idea behind CompX International and HNI 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.