Correlation Between Hanesbrands and NYSE Composite
Can any of the company-specific risk be diversified away by investing in both Hanesbrands and NYSE Composite 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 Hanesbrands and NYSE Composite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and NYSE Composite, you can compare the effects of market volatilities on Hanesbrands and NYSE Composite 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 Hanesbrands with a short position of NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and NYSE Composite.
Diversification Opportunities for Hanesbrands and NYSE Composite
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hanesbrands and NYSE is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite and Hanesbrands 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 Hanesbrands are associated (or correlated) with NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of Hanesbrands i.e., Hanesbrands and NYSE Composite go up and down completely randomly.
Pair Corralation between Hanesbrands and NYSE Composite
Considering the 90-day investment horizon Hanesbrands is expected to generate 5.55 times more return on investment than NYSE Composite. However, Hanesbrands is 5.55 times more volatile than NYSE Composite. It trades about 0.04 of its potential returns per unit of risk. NYSE Composite is currently generating about 0.08 per unit of risk. If you would invest 486.00 in Hanesbrands on February 26, 2024 and sell it today you would earn a total of 26.00 from holding Hanesbrands or generate 5.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hanesbrands vs. NYSE Composite
Performance |
Timeline |
Hanesbrands and NYSE Composite Volatility Contrast
Predicted Return Density |
Returns |
Hanesbrands
Pair trading matchups for Hanesbrands
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with Hanesbrands and NYSE Composite
The main advantage of trading using opposite Hanesbrands and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.Hanesbrands vs. LCI Industries | Hanesbrands vs. Curtiss Motorcycles | Hanesbrands vs. Marine Products | Hanesbrands vs. MCBC Holdings |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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