Correlation Between Hanesbrands and Source Markets
Can any of the company-specific risk be diversified away by investing in both Hanesbrands and Source Markets 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 Source Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and Source Markets plc, you can compare the effects of market volatilities on Hanesbrands and Source Markets 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 Source Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and Source Markets.
Diversification Opportunities for Hanesbrands and Source Markets
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hanesbrands and Source is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Source Markets plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Source Markets plc 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 Source Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Source Markets plc has no effect on the direction of Hanesbrands i.e., Hanesbrands and Source Markets go up and down completely randomly.
Pair Corralation between Hanesbrands and Source Markets
Considering the 90-day investment horizon Hanesbrands is expected to generate 1.82 times more return on investment than Source Markets. However, Hanesbrands is 1.82 times more volatile than Source Markets plc. It trades about 0.2 of its potential returns per unit of risk. Source Markets plc is currently generating about 0.05 per unit of risk. If you would invest 790.00 in Hanesbrands on September 12, 2024 and sell it today you would earn a total of 76.00 from holding Hanesbrands or generate 9.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hanesbrands vs. Source Markets plc
Performance |
| Timeline |
| Hanesbrands |
| Source Markets plc |
Hanesbrands and Source Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanesbrands and Source Markets
The main advantage of trading using opposite Hanesbrands and Source Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, Source Markets 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 Source Markets will offset losses from the drop in Source Markets' long position.| Hanesbrands vs. Ralph Lauren Corp | Hanesbrands vs. Levi Strauss Co | Hanesbrands vs. Under Armour C | Hanesbrands vs. PVH Corp |
| Source Markets vs. UBS Fund Solutions | Source Markets vs. Xtrackers II | Source Markets vs. Xtrackers Nikkei 225 | Source Markets vs. iShares VII PLC |
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 Stocks Directory module to find actively traded stocks across global markets.
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