Correlation Between Hanesbrands and ACE Solactive
Can any of the company-specific risk be diversified away by investing in both Hanesbrands and ACE Solactive 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 ACE Solactive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and ACE Solactive Global, you can compare the effects of market volatilities on Hanesbrands and ACE Solactive 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 ACE Solactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and ACE Solactive.
Diversification Opportunities for Hanesbrands and ACE Solactive
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanesbrands and ACE is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and ACE Solactive Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACE Solactive Global 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 ACE Solactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACE Solactive Global has no effect on the direction of Hanesbrands i.e., Hanesbrands and ACE Solactive go up and down completely randomly.
Pair Corralation between Hanesbrands and ACE Solactive
Considering the 90-day investment horizon Hanesbrands is expected to under-perform the ACE Solactive. In addition to that, Hanesbrands is 1.18 times more volatile than ACE Solactive Global. It trades about -0.23 of its total potential returns per unit of risk. ACE Solactive Global is currently generating about -0.07 per unit of volatility. If you would invest 2,486,500 in ACE Solactive Global on January 15, 2025 and sell it today you would lose (195,000) from holding ACE Solactive Global or give up 7.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hanesbrands vs. ACE Solactive Global
Performance |
| Timeline |
| Hanesbrands |
| ACE Solactive Global |
Hanesbrands and ACE Solactive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanesbrands and ACE Solactive
The main advantage of trading using opposite Hanesbrands and ACE Solactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, ACE Solactive 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 ACE Solactive will offset losses from the drop in ACE Solactive's long position.| Hanesbrands vs. Ralph Lauren Corp | Hanesbrands vs. Levi Strauss Co | Hanesbrands vs. Under Armour C | Hanesbrands vs. PVH Corp |
| ACE Solactive vs. ACE KRX Physical | ACE Solactive vs. ACE NASDAQ100 3070 | ACE Solactive vs. ACE EV Value | ACE Solactive vs. ACE NVIDIA30 Blend |
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.
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