Correlation Between Hanesbrands and PVH Corp
Can any of the company-specific risk be diversified away by investing in both Hanesbrands and PVH 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 PVH Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and PVH Corp, you can compare the effects of market volatilities on Hanesbrands and PVH 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 PVH Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and PVH Corp.
Diversification Opportunities for Hanesbrands and PVH Corp
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanesbrands and PVH is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and PVH Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PVH Corp 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 PVH Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PVH Corp has no effect on the direction of Hanesbrands i.e., Hanesbrands and PVH Corp go up and down completely randomly.
Pair Corralation between Hanesbrands and PVH Corp
Considering the 90-day investment horizon Hanesbrands is expected to generate 1.41 times more return on investment than PVH Corp. However, Hanesbrands is 1.41 times more volatile than PVH Corp. It trades about 0.09 of its potential returns per unit of risk. PVH Corp is currently generating about -0.05 per unit of risk. If you would invest 540.00 in Hanesbrands on August 27, 2024 and sell it today you would earn a total of 314.00 from holding Hanesbrands or generate 58.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanesbrands vs. PVH Corp
Performance |
| Timeline |
| Hanesbrands |
| PVH Corp |
Hanesbrands and PVH Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanesbrands and PVH Corp
The main advantage of trading using opposite Hanesbrands and PVH Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, PVH 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 PVH Corp will offset losses from the drop in PVH Corp's long position.| Hanesbrands vs. Ralph Lauren Corp | Hanesbrands vs. Levi Strauss Co | Hanesbrands vs. Under Armour C | Hanesbrands vs. PVH Corp |
| PVH Corp vs. VF Corporation | PVH Corp vs. Levi Strauss Co | PVH Corp vs. Under Armour A | PVH Corp vs. Oxford Industries |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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