Correlation Between Under Armour and Hanesbrands
Can any of the company-specific risk be diversified away by investing in both Under Armour 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 Under Armour and Hanesbrands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Under Armour A and Hanesbrands, you can compare the effects of market volatilities on Under Armour 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 Under Armour with a short position of Hanesbrands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Under Armour and Hanesbrands.
Diversification Opportunities for Under Armour and Hanesbrands
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Under and Hanesbrands is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour A and Hanesbrands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanesbrands and Under Armour 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 Under Armour A 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 Under Armour i.e., Under Armour and Hanesbrands go up and down completely randomly.
Pair Corralation between Under Armour and Hanesbrands
Considering the 90-day investment horizon Under Armour is expected to generate 1.06 times less return on investment than Hanesbrands. In addition to that, Under Armour is 1.54 times more volatile than Hanesbrands. It trades about 0.11 of its total potential returns per unit of risk. Hanesbrands is currently generating about 0.18 per unit of volatility. If you would invest 727.00 in Hanesbrands on August 27, 2024 and sell it today you would earn a total of 118.00 from holding Hanesbrands or generate 16.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Under Armour A vs. Hanesbrands
Performance |
| Timeline |
| Under Armour A |
| Hanesbrands |
Under Armour and Hanesbrands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Under Armour and Hanesbrands
The main advantage of trading using opposite Under Armour and Hanesbrands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour 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.| Under Armour vs. Levi Strauss Co | Under Armour vs. Hanesbrands | Under Armour vs. VF Corporation | Under Armour vs. Ralph Lauren Corp |
| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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