Correlation Between Hanesbrands and BMO SIA
Can any of the company-specific risk be diversified away by investing in both Hanesbrands and BMO SIA 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 BMO SIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and BMO SIA Focused, you can compare the effects of market volatilities on Hanesbrands and BMO SIA 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 BMO SIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and BMO SIA.
Diversification Opportunities for Hanesbrands and BMO SIA
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hanesbrands and BMO is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and BMO SIA Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMO SIA Focused 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 BMO SIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMO SIA Focused has no effect on the direction of Hanesbrands i.e., Hanesbrands and BMO SIA go up and down completely randomly.
Pair Corralation between Hanesbrands and BMO SIA
Considering the 90-day investment horizon Hanesbrands is expected to generate 5.33 times more return on investment than BMO SIA. However, Hanesbrands is 5.33 times more volatile than BMO SIA Focused. It trades about 0.17 of its potential returns per unit of risk. BMO SIA Focused is currently generating about 0.3 per unit of risk. If you would invest 640.00 in Hanesbrands on September 12, 2024 and sell it today you would earn a total of 226.00 from holding Hanesbrands or generate 35.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanesbrands vs. BMO SIA Focused
Performance |
| Timeline |
| Hanesbrands |
| BMO SIA Focused |
Hanesbrands and BMO SIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanesbrands and BMO SIA
The main advantage of trading using opposite Hanesbrands and BMO SIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, BMO SIA 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 BMO SIA will offset losses from the drop in BMO SIA's long position.| Hanesbrands vs. Ralph Lauren Corp | Hanesbrands vs. Levi Strauss Co | Hanesbrands vs. Under Armour C | Hanesbrands vs. PVH Corp |
| BMO SIA vs. BMO SIA Focused | BMO SIA vs. BMO MSCI USA | BMO SIA vs. BMO MSCI Canada | BMO SIA vs. BMO Low Volatility |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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