Correlation Between Hasbro and Hanesbrands

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

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

Diversification Opportunities for Hasbro and Hanesbrands

-0.22

Correlation Coefficient

Hasbro  Hanesbrands

Very good diversification

The 3 months correlation between Hasbro and Hanesbrands is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Hasbro Inc and Hanesbrands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanesbrands and Hasbro 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 Hasbro Inc 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 Hasbro i.e., Hasbro and Hanesbrands go up and down completely randomly.

Pair Corralation between Hasbro and Hanesbrands

Considering the 90-day investment horizon Hasbro Inc is expected to generate 0.63 times more return on investment than Hanesbrands. However, Hasbro Inc is 1.58 times less risky than Hanesbrands. It trades about 0.25 of its potential returns per unit of risk. Hanesbrands is currently generating about -0.22 per unit of risk. If you would invest  5,873  in Hasbro Inc on November 28, 2024 and sell it today you would earn a total of  982.00  from holding Hasbro Inc or generate 16.72% return on investment over 90 days.

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

Hasbro Inc  vs.  Hanesbrands

Hasbro Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hasbro Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hasbro may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Hanesbrands

Risk-Adjusted Performance

Very Weak

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.

Pair Trading with Hasbro and Hanesbrands

The main advantage of trading using opposite Hasbro and Hanesbrands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hasbro 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 Hasbro Inc 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.