Correlation Between Hanesbrands and BASF SE
Can any of the company-specific risk be diversified away by investing in both Hanesbrands and BASF SE 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 BASF SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and BASF SE, you can compare the effects of market volatilities on Hanesbrands and BASF SE 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 BASF SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and BASF SE.
Diversification Opportunities for Hanesbrands and BASF SE
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hanesbrands and BASF is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and BASF SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE 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 BASF SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASF SE has no effect on the direction of Hanesbrands i.e., Hanesbrands and BASF SE go up and down completely randomly.
Pair Corralation between Hanesbrands and BASF SE
Considering the 90-day investment horizon Hanesbrands is expected to generate 2.08 times more return on investment than BASF SE. However, Hanesbrands is 2.08 times more volatile than BASF SE. It trades about 0.26 of its potential returns per unit of risk. BASF SE is currently generating about -0.11 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 Against |
| Strength | Very Weak |
| Accuracy | 66.67% |
| Values | Daily Returns |
Hanesbrands vs. BASF SE
Performance |
| Timeline |
| Hanesbrands |
| BASF SE |
Hanesbrands and BASF SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanesbrands and BASF SE
The main advantage of trading using opposite Hanesbrands and BASF SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, BASF SE 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 BASF SE will offset losses from the drop in BASF SE's long position.| Hanesbrands vs. Ralph Lauren Corp | Hanesbrands vs. Levi Strauss Co | Hanesbrands vs. Under Armour C | Hanesbrands vs. PVH Corp |
| BASF SE vs. NordTelekom Telecommunications Service | BASF SE vs. Delta Technologies Nyrt | BASF SE vs. Nutex Investments PLC | BASF SE vs. Commerzbank AG |
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 CEOs Directory module to screen CEOs from public companies around the world.
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