Correlation Between Hanesbrands and CBRE GROUP
Can any of the company-specific risk be diversified away by investing in both Hanesbrands and CBRE GROUP 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 CBRE GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and CBRE GROUP A, you can compare the effects of market volatilities on Hanesbrands and CBRE GROUP 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 CBRE GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and CBRE GROUP.
Diversification Opportunities for Hanesbrands and CBRE GROUP
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hanesbrands and CBRE is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and CBRE GROUP A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBRE GROUP A 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 CBRE GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBRE GROUP A has no effect on the direction of Hanesbrands i.e., Hanesbrands and CBRE GROUP go up and down completely randomly.
Pair Corralation between Hanesbrands and CBRE GROUP
Considering the 90-day investment horizon Hanesbrands is expected to generate 2.04 times more return on investment than CBRE GROUP. However, Hanesbrands is 2.04 times more volatile than CBRE GROUP A. It trades about 0.06 of its potential returns per unit of risk. CBRE GROUP A is currently generating about 0.09 per unit of risk. If you would invest 472.00 in Hanesbrands on September 12, 2024 and sell it today you would earn a total of 369.00 from holding Hanesbrands or generate 78.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.32% |
| Values | Daily Returns |
Hanesbrands vs. CBRE GROUP A
Performance |
| Timeline |
| Hanesbrands |
| CBRE GROUP A |
Hanesbrands and CBRE GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanesbrands and CBRE GROUP
The main advantage of trading using opposite Hanesbrands and CBRE GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, CBRE GROUP 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 CBRE GROUP will offset losses from the drop in CBRE GROUP's long position.| Hanesbrands vs. Ralph Lauren Corp | Hanesbrands vs. Levi Strauss Co | Hanesbrands vs. Under Armour C | Hanesbrands vs. PVH Corp |
| CBRE GROUP vs. Entravision Communications | CBRE GROUP vs. Perdoceo Education | CBRE GROUP vs. Zoom Video Communications | CBRE GROUP vs. DEVRY EDUCATION GRP |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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