Correlation Between Emerson Radio and Hanesbrands

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Can any of the company-specific risk be diversified away by investing in both Emerson Radio and Hanesbrands 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 Emerson Radio and Hanesbrands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Radio and Hanesbrands, you can compare the effects of market volatilities on Emerson Radio and Hanesbrands 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 Emerson Radio with a short position of Hanesbrands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Radio and Hanesbrands.

Diversification Opportunities for Emerson Radio and Hanesbrands

EmersonHanesbrandsDiversified AwayEmersonHanesbrandsDiversified Away100%
-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between Emerson and Hanesbrands is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Radio and Hanesbrands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanesbrands and Emerson Radio 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 Emerson Radio are associated (or correlated) with Hanesbrands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanesbrands has no effect on the direction of Emerson Radio i.e., Emerson Radio and Hanesbrands go up and down completely randomly.

Pair Corralation between Emerson Radio and Hanesbrands

Considering the 90-day investment horizon Emerson Radio is expected to generate 1.93 times less return on investment than Hanesbrands. But when comparing it to its historical volatility, Emerson Radio is 1.04 times less risky than Hanesbrands. It trades about 0.01 of its potential returns per unit of risk. Hanesbrands is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  568.00  in Hanesbrands on November 19, 2024 and sell it today you would earn a total of  20.00  from holding Hanesbrands or generate 3.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Emerson Radio  vs.  Hanesbrands

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-15-10-50510
JavaScript chart by amCharts 3.21.15MSN HBI
       Timeline  
Emerson Radio 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Emerson Radio are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Emerson Radio displayed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.350.40.450.50.55
Hanesbrands 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Hanesbrands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb66.577.588.59

Emerson Radio and Hanesbrands Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-14.74-11.04-7.34-3.64-0.06173.557.311.0414.7818.52 0.0100.0150.0200.0250.0300.0350.040
JavaScript chart by amCharts 3.21.15MSN HBI
       Returns  

Pair Trading with Emerson Radio and Hanesbrands

The main advantage of trading using opposite Emerson Radio and Hanesbrands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Radio position performs unexpectedly, Hanesbrands 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 Hanesbrands will offset losses from the drop in Hanesbrands' long position.
The idea behind Emerson Radio and Hanesbrands pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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