Correlation Between Hanesbrands and Renova Energia
Can any of the company-specific risk be diversified away by investing in both Hanesbrands and Renova Energia 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 Renova Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and Renova Energia SA, you can compare the effects of market volatilities on Hanesbrands and Renova Energia 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 Renova Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and Renova Energia.
Diversification Opportunities for Hanesbrands and Renova Energia
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hanesbrands and Renova is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Renova Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renova Energia SA 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 Renova Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renova Energia SA has no effect on the direction of Hanesbrands i.e., Hanesbrands and Renova Energia go up and down completely randomly.
Pair Corralation between Hanesbrands and Renova Energia
Considering the 90-day investment horizon Hanesbrands is expected to generate 1.28 times more return on investment than Renova Energia. However, Hanesbrands is 1.28 times more volatile than Renova Energia SA. It trades about 0.11 of its potential returns per unit of risk. Renova Energia SA is currently generating about -0.02 per unit of risk. If you would invest 400.00 in Hanesbrands on September 12, 2024 and sell it today you would earn a total of 466.00 from holding Hanesbrands or generate 116.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Hanesbrands vs. Renova Energia SA
Performance |
| Timeline |
| Hanesbrands |
| Renova Energia SA |
Hanesbrands and Renova Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanesbrands and Renova Energia
The main advantage of trading using opposite Hanesbrands and Renova Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, Renova Energia 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 Renova Energia will offset losses from the drop in Renova Energia's long position.| Hanesbrands vs. Ralph Lauren Corp | Hanesbrands vs. Levi Strauss Co | Hanesbrands vs. Under Armour C | Hanesbrands vs. PVH Corp |
| Renova Energia vs. CM Hospitalar SA | Renova Energia vs. G2D Investments | Renova Energia vs. Delta Air Lines | Renova Energia vs. UnitedHealth Group Incorporated |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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