Correlation Between Hanesbrands and Gmo International
Can any of the company-specific risk be diversified away by investing in both Hanesbrands and Gmo International 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 Gmo International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and Gmo International Equity, you can compare the effects of market volatilities on Hanesbrands and Gmo International 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 Gmo International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and Gmo International.
Diversification Opportunities for Hanesbrands and Gmo International
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hanesbrands and Gmo is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Gmo International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo International Equity 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 Gmo International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo International Equity has no effect on the direction of Hanesbrands i.e., Hanesbrands and Gmo International go up and down completely randomly.
Pair Corralation between Hanesbrands and Gmo International
Considering the 90-day investment horizon Hanesbrands is expected to generate 4.41 times more return on investment than Gmo International. However, Hanesbrands is 4.41 times more volatile than Gmo International Equity. It trades about 0.04 of its potential returns per unit of risk. Gmo International Equity is currently generating about 0.08 per unit of risk. If you would invest 592.00 in Hanesbrands on September 12, 2024 and sell it today you would earn a total of 249.00 from holding Hanesbrands or generate 42.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Hanesbrands vs. Gmo International Equity
Performance |
| Timeline |
| Hanesbrands |
| Gmo International Equity |
Hanesbrands and Gmo International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanesbrands and Gmo International
The main advantage of trading using opposite Hanesbrands and Gmo International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, Gmo International 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 Gmo International will offset losses from the drop in Gmo International'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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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