Correlation Between Hanesbrands and Prudential Core
Can any of the company-specific risk be diversified away by investing in both Hanesbrands and Prudential Core 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 Prudential Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and Prudential E Bond, you can compare the effects of market volatilities on Hanesbrands and Prudential Core 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 Prudential Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and Prudential Core.
Diversification Opportunities for Hanesbrands and Prudential Core
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hanesbrands and Prudential is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Prudential E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential E Bond 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 Prudential Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential E Bond has no effect on the direction of Hanesbrands i.e., Hanesbrands and Prudential Core go up and down completely randomly.
Pair Corralation between Hanesbrands and Prudential Core
Considering the 90-day investment horizon Hanesbrands is expected to generate 12.03 times more return on investment than Prudential Core. However, Hanesbrands is 12.03 times more volatile than Prudential E Bond. It trades about 0.26 of its potential returns per unit of risk. Prudential E Bond is currently generating about 0.12 per unit of risk. If you would invest 712.00 in Hanesbrands on September 4, 2024 and sell it today you would earn a total of 179.00 from holding Hanesbrands or generate 25.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Hanesbrands vs. Prudential E Bond
Performance |
| Timeline |
| Hanesbrands |
| Prudential E Bond |
Hanesbrands and Prudential Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanesbrands and Prudential Core
The main advantage of trading using opposite Hanesbrands and Prudential Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, Prudential Core 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 Prudential Core will offset losses from the drop in Prudential Core's long position.| Hanesbrands vs. Ralph Lauren Corp | Hanesbrands vs. Levi Strauss Co | Hanesbrands vs. Under Armour C | Hanesbrands vs. PVH Corp |
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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