Correlation Between Hanesbrands and Wilton Resources
Can any of the company-specific risk be diversified away by investing in both Hanesbrands and Wilton Resources 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 Wilton Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and Wilton Resources, you can compare the effects of market volatilities on Hanesbrands and Wilton Resources 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 Wilton Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and Wilton Resources.
Diversification Opportunities for Hanesbrands and Wilton Resources
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hanesbrands and Wilton is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Wilton Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilton Resources 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 Wilton Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilton Resources has no effect on the direction of Hanesbrands i.e., Hanesbrands and Wilton Resources go up and down completely randomly.
Pair Corralation between Hanesbrands and Wilton Resources
Considering the 90-day investment horizon Hanesbrands is expected to generate 0.66 times more return on investment than Wilton Resources. However, Hanesbrands is 1.51 times less risky than Wilton Resources. It trades about 0.12 of its potential returns per unit of risk. Wilton Resources is currently generating about 0.05 per unit of risk. If you would invest 634.00 in Hanesbrands on November 2, 2024 and sell it today you would earn a total of 214.00 from holding Hanesbrands or generate 33.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.26% |
| Values | Daily Returns |
Hanesbrands vs. Wilton Resources
Performance |
| Timeline |
| Hanesbrands |
| Wilton Resources |
Hanesbrands and Wilton Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanesbrands and Wilton Resources
The main advantage of trading using opposite Hanesbrands and Wilton Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, Wilton Resources 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 Wilton Resources will offset losses from the drop in Wilton Resources' long position.| Hanesbrands vs. Ralph Lauren Corp | Hanesbrands vs. Levi Strauss Co | Hanesbrands vs. Under Armour C | Hanesbrands vs. PVH Corp |
| Wilton Resources vs. Santa Fe Petroleum | Wilton Resources vs. Liberty Energy Corp | Wilton Resources vs. Rodinia Oil Corp | Wilton Resources vs. Mountainview Energy |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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