Correlation Between Hanesbrands and Kensington Dynamic
Can any of the company-specific risk be diversified away by investing in both Hanesbrands and Kensington Dynamic 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 Kensington Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and Kensington Dynamic Growth, you can compare the effects of market volatilities on Hanesbrands and Kensington Dynamic 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 Kensington Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and Kensington Dynamic.
Diversification Opportunities for Hanesbrands and Kensington Dynamic
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanesbrands and Kensington is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Kensington Dynamic Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kensington Dynamic Growth 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 Kensington Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kensington Dynamic Growth has no effect on the direction of Hanesbrands i.e., Hanesbrands and Kensington Dynamic go up and down completely randomly.
Pair Corralation between Hanesbrands and Kensington Dynamic
Considering the 90-day investment horizon Hanesbrands is expected to generate 5.38 times more return on investment than Kensington Dynamic. However, Hanesbrands is 5.38 times more volatile than Kensington Dynamic Growth. It trades about 0.26 of its potential returns per unit of risk. Kensington Dynamic Growth is currently generating about 0.34 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanesbrands vs. Kensington Dynamic Growth
Performance |
| Timeline |
| Hanesbrands |
| Kensington Dynamic Growth |
Hanesbrands and Kensington Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanesbrands and Kensington Dynamic
The main advantage of trading using opposite Hanesbrands and Kensington Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, Kensington Dynamic 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 Kensington Dynamic will offset losses from the drop in Kensington Dynamic's long position.| Hanesbrands vs. Ralph Lauren Corp | Hanesbrands vs. Levi Strauss Co | Hanesbrands vs. Under Armour C | Hanesbrands vs. PVH Corp |
| Kensington Dynamic vs. Kensington Defender Institutional | Kensington Dynamic vs. Kensington Active Advantage | Kensington Dynamic vs. Pimco Global Multi Asset | Kensington Dynamic vs. Acclivity Small Cap |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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