Correlation Between Hanesbrands and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both Hanesbrands and Diamond Hill 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 Diamond Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and Diamond Hill Large, you can compare the effects of market volatilities on Hanesbrands and Diamond Hill 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 Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and Diamond Hill.
Diversification Opportunities for Hanesbrands and Diamond Hill
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hanesbrands and Diamond is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Diamond Hill Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Large 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 Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Large has no effect on the direction of Hanesbrands i.e., Hanesbrands and Diamond Hill go up and down completely randomly.
Pair Corralation between Hanesbrands and Diamond Hill
Considering the 90-day investment horizon Hanesbrands is expected to generate 4.8 times more return on investment than Diamond Hill. However, Hanesbrands is 4.8 times more volatile than Diamond Hill Large. It trades about 0.15 of its potential returns per unit of risk. Diamond Hill Large is currently generating about 0.1 per unit of risk. If you would invest 448.00 in Hanesbrands on September 3, 2024 and sell it today you would earn a total of 422.00 from holding Hanesbrands or generate 94.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanesbrands vs. Diamond Hill Large
Performance |
| Timeline |
| Hanesbrands |
| Diamond Hill Large |
Hanesbrands and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanesbrands and Diamond Hill
The main advantage of trading using opposite Hanesbrands and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, Diamond Hill 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 Diamond Hill will offset losses from the drop in Diamond Hill's long position.| Hanesbrands vs. Ralph Lauren Corp | Hanesbrands vs. Levi Strauss Co | Hanesbrands vs. Under Armour C | Hanesbrands vs. PVH Corp |
| Diamond Hill vs. Massmutual Premier Diversified | Diamond Hill vs. Western Asset Diversified | Diamond Hill vs. Harbor Diversified International | Diamond Hill vs. Massmutual Select Diversified |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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