Correlation Between Hanesbrands and BROOKFIELD CORP
Can any of the company-specific risk be diversified away by investing in both Hanesbrands and BROOKFIELD CORP 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 BROOKFIELD CORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and BROOKFIELD P CLA, you can compare the effects of market volatilities on Hanesbrands and BROOKFIELD CORP 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 BROOKFIELD CORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and BROOKFIELD CORP.
Diversification Opportunities for Hanesbrands and BROOKFIELD CORP
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hanesbrands and BROOKFIELD is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and BROOKFIELD P CLA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROOKFIELD P CLA 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 BROOKFIELD CORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROOKFIELD P CLA has no effect on the direction of Hanesbrands i.e., Hanesbrands and BROOKFIELD CORP go up and down completely randomly.
Pair Corralation between Hanesbrands and BROOKFIELD CORP
Considering the 90-day investment horizon Hanesbrands is expected to generate 1.65 times more return on investment than BROOKFIELD CORP. However, Hanesbrands is 1.65 times more volatile than BROOKFIELD P CLA. It trades about 0.26 of its potential returns per unit of risk. BROOKFIELD P CLA is currently generating about 0.31 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 Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hanesbrands vs. BROOKFIELD P CLA
Performance |
| Timeline |
| Hanesbrands |
| BROOKFIELD P CLA |
Hanesbrands and BROOKFIELD CORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanesbrands and BROOKFIELD CORP
The main advantage of trading using opposite Hanesbrands and BROOKFIELD CORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, BROOKFIELD CORP 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 BROOKFIELD CORP will offset losses from the drop in BROOKFIELD CORP'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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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