Correlation Between Hanesbrands and Aurea SA
Can any of the company-specific risk be diversified away by investing in both Hanesbrands and Aurea SA 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 Aurea SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and Aurea SA, you can compare the effects of market volatilities on Hanesbrands and Aurea SA 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 Aurea SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and Aurea SA.
Diversification Opportunities for Hanesbrands and Aurea SA
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hanesbrands and Aurea is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Aurea SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurea SA 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 Aurea SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurea SA has no effect on the direction of Hanesbrands i.e., Hanesbrands and Aurea SA go up and down completely randomly.
Pair Corralation between Hanesbrands and Aurea SA
Considering the 90-day investment horizon Hanesbrands is expected to generate 1.76 times more return on investment than Aurea SA. However, Hanesbrands is 1.76 times more volatile than Aurea SA. It trades about 0.26 of its potential returns per unit of risk. Aurea SA is currently generating about -0.53 per unit of risk. If you would invest 712.00 in Hanesbrands on September 4, 2024 and sell it today you would earn a total of 179.00 from holding Hanesbrands or generate 25.14% 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. Aurea SA
Performance |
| Timeline |
| Hanesbrands |
| Aurea SA |
Hanesbrands and Aurea SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanesbrands and Aurea SA
The main advantage of trading using opposite Hanesbrands and Aurea SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, Aurea SA 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 Aurea SA will offset losses from the drop in Aurea SA's 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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