Correlation Between Hanesbrands and Ring Energy
Can any of the company-specific risk be diversified away by investing in both Hanesbrands and Ring Energy 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 Ring Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and Ring Energy, you can compare the effects of market volatilities on Hanesbrands and Ring Energy 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 Ring Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and Ring Energy.
Diversification Opportunities for Hanesbrands and Ring Energy
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hanesbrands and Ring is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Ring Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ring Energy 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 Ring Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ring Energy has no effect on the direction of Hanesbrands i.e., Hanesbrands and Ring Energy go up and down completely randomly.
Pair Corralation between Hanesbrands and Ring Energy
Considering the 90-day investment horizon Hanesbrands is expected to generate 1.18 times more return on investment than Ring Energy. However, Hanesbrands is 1.18 times more volatile than Ring Energy. It trades about 0.26 of its potential returns per unit of risk. Ring Energy is currently generating about 0.08 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 Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hanesbrands vs. Ring Energy
Performance |
| Timeline |
| Hanesbrands |
| Ring Energy |
Hanesbrands and Ring Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanesbrands and Ring Energy
The main advantage of trading using opposite Hanesbrands and Ring Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, Ring Energy 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 Ring Energy will offset losses from the drop in Ring Energy's long position.| Hanesbrands vs. Ralph Lauren Corp | Hanesbrands vs. Levi Strauss Co | Hanesbrands vs. Under Armour C | Hanesbrands vs. PVH Corp |
| Ring Energy vs. Performance Food Group | Ring Energy vs. HF FOODS GRP | Ring Energy vs. SINGAPORE AIRLINES | Ring Energy vs. Nok Airlines PCL |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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