Correlation Between Hanesbrands and City National
Can any of the company-specific risk be diversified away by investing in both Hanesbrands and City National 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 City National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and City National Rochdale, you can compare the effects of market volatilities on Hanesbrands and City National 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 City National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and City National.
Diversification Opportunities for Hanesbrands and City National
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hanesbrands and City is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and City National Rochdale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City National Rochdale 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 City National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City National Rochdale has no effect on the direction of Hanesbrands i.e., Hanesbrands and City National go up and down completely randomly.
Pair Corralation between Hanesbrands and City National
Considering the 90-day investment horizon Hanesbrands is expected to generate 4.06 times less return on investment than City National. But when comparing it to its historical volatility, Hanesbrands is 4.19 times less risky than City National. It trades about 0.04 of its potential returns per unit of risk. City National Rochdale is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 92.00 in City National Rochdale on September 3, 2024 and sell it today you would earn a total of 8.00 from holding City National Rochdale or generate 8.7% 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. City National Rochdale
Performance |
| Timeline |
| Hanesbrands |
| City National Rochdale |
Hanesbrands and City National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanesbrands and City National
The main advantage of trading using opposite Hanesbrands and City National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, City National 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 City National will offset losses from the drop in City National'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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