Correlation Between Hanesbrands and Targa Resources
Can any of the company-specific risk be diversified away by investing in both Hanesbrands and Targa Resources 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 Targa Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and Targa Resources Corp, you can compare the effects of market volatilities on Hanesbrands and Targa Resources 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 Targa Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and Targa Resources.
Diversification Opportunities for Hanesbrands and Targa Resources
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hanesbrands and Targa is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Targa Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Targa Resources Corp 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 Targa Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Targa Resources Corp has no effect on the direction of Hanesbrands i.e., Hanesbrands and Targa Resources go up and down completely randomly.
Pair Corralation between Hanesbrands and Targa Resources
Considering the 90-day investment horizon Hanesbrands is expected to generate 1.18 times more return on investment than Targa Resources. However, Hanesbrands is 1.18 times more volatile than Targa Resources Corp. It trades about 0.2 of its potential returns per unit of risk. Targa Resources Corp is currently generating about -0.12 per unit of risk. If you would invest 790.00 in Hanesbrands on September 12, 2024 and sell it today you would earn a total of 76.00 from holding Hanesbrands or generate 9.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hanesbrands vs. Targa Resources Corp
Performance |
| Timeline |
| Hanesbrands |
| Targa Resources Corp |
Hanesbrands and Targa Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanesbrands and Targa Resources
The main advantage of trading using opposite Hanesbrands and Targa Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, Targa Resources 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 Targa Resources will offset losses from the drop in Targa Resources' long position.| Hanesbrands vs. Ralph Lauren Corp | Hanesbrands vs. Levi Strauss Co | Hanesbrands vs. Under Armour C | Hanesbrands vs. PVH Corp |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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