Correlation Between Vizio Holding and Hanesbrands

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

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

Diversification Opportunities for Vizio Holding and Hanesbrands

0.51

Correlation Coefficient

Vizio Holding  Hanesbrands

Very weak diversification

The 3 months correlation between Vizio and Hanesbrands is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Vizio Holding Corp and Hanesbrands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanesbrands and Vizio Holding 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 Vizio Holding Corp are associated (or correlated) with Hanesbrands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanesbrands has no effect on the direction of Vizio Holding i.e., Vizio Holding and Hanesbrands go up and down completely randomly.

Pair Corralation between Vizio Holding and Hanesbrands

Given the investment horizon of 90 days Vizio Holding Corp is expected to generate 0.18 times more return on investment than Hanesbrands. However, Vizio Holding Corp is 5.68 times less risky than Hanesbrands. It trades about -0.16 of its potential returns per unit of risk. Hanesbrands is currently generating about -0.12 per unit of risk. If you would invest  1,101  in Vizio Holding Corp on February 5, 2024 and sell it today you would lose (46.00) from holding Vizio Holding Corp or give up 4.18% of portfolio value over 90 days.

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

Vizio Holding Corp  vs.  Hanesbrands

Vizio Holding Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vizio Holding Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Vizio Holding displayed solid returns over the last few months and may actually be approaching a breakup point.

Hanesbrands

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hanesbrands are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, Hanesbrands is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Vizio Holding and Hanesbrands

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

The idea behind Vizio Holding Corp and Hanesbrands 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.