Correlation Between Hanesbrands and Lifex Income
Can any of the company-specific risk be diversified away by investing in both Hanesbrands and Lifex Income 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 Lifex Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and Lifex Income, you can compare the effects of market volatilities on Hanesbrands and Lifex Income 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 Lifex Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and Lifex Income.
Diversification Opportunities for Hanesbrands and Lifex Income
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hanesbrands and Lifex is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Lifex Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifex Income 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 Lifex Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifex Income has no effect on the direction of Hanesbrands i.e., Hanesbrands and Lifex Income go up and down completely randomly.
Pair Corralation between Hanesbrands and Lifex Income
Considering the 90-day investment horizon Hanesbrands is expected to generate 5.15 times more return on investment than Lifex Income. However, Hanesbrands is 5.15 times more volatile than Lifex Income. It trades about 0.04 of its potential returns per unit of risk. Lifex Income is currently generating about 0.01 per unit of risk. If you would invest 629.00 in Hanesbrands on September 4, 2024 and sell it today you would earn a total of 262.00 from holding Hanesbrands or generate 41.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 46.06% |
| Values | Daily Returns |
Hanesbrands vs. Lifex Income
Performance |
| Timeline |
| Hanesbrands |
| Lifex Income |
Hanesbrands and Lifex Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanesbrands and Lifex Income
The main advantage of trading using opposite Hanesbrands and Lifex Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, Lifex Income 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 Lifex Income will offset losses from the drop in Lifex Income'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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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