Correlation Between Brunswick and Hanesbrands

Can any of the company-specific risk be diversified away by investing in both Brunswick 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 Brunswick and Hanesbrands into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brunswick and Hanesbrands, you can compare the effects of market volatilities on Brunswick 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 Brunswick with a short position of Hanesbrands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunswick and Hanesbrands.

Diversification Opportunities for Brunswick and Hanesbrands

-0.38

Correlation Coefficient

Brunswick  Hanesbrands

Very good diversification

The 3 months correlation between Brunswick and Hanesbrands is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Hanesbrands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanesbrands and Brunswick 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 Brunswick 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 Brunswick i.e., Brunswick and Hanesbrands go up and down completely randomly.

Pair Corralation between Brunswick and Hanesbrands

Allowing for the 90-day total investment horizon Brunswick is expected to under-perform the Hanesbrands. But the stock apears to be less risky and, when comparing its historical volatility, Brunswick is 1.07 times less risky than Hanesbrands. The stock trades about -0.54 of its potential returns per unit of risk. The Hanesbrands is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  837.00  in Hanesbrands on October 10, 2024 and sell it today you would lose (2.00) from holding Hanesbrands or give up 0.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Brunswick  vs.  Hanesbrands

Brunswick

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brunswick has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Hanesbrands

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hanesbrands are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting fundamental drivers, Hanesbrands demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brunswick and Hanesbrands

The main advantage of trading using opposite Brunswick and Hanesbrands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick 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 Brunswick 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.