Correlation Between Hanesbrands and YCC Parts

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

By analyzing existing cross correlation between Hanesbrands and YCC Parts MFG, you can compare the effects of market volatilities on Hanesbrands and YCC Parts 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 YCC Parts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and YCC Parts.

Diversification Opportunities for Hanesbrands and YCC Parts

-0.87

Correlation Coefficient

Hanesbrands  YCC Parts

Pay attention - limited upside

The 3 months correlation between Hanesbrands and YCC is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and YCC Parts MFG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YCC Parts MFG 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 YCC Parts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YCC Parts MFG has no effect on the direction of Hanesbrands i.e., Hanesbrands and YCC Parts go up and down completely randomly.

Pair Corralation between Hanesbrands and YCC Parts

Considering the 90-day investment horizon Hanesbrands is expected to under-perform the YCC Parts. In addition to that, Hanesbrands is 3.63 times more volatile than YCC Parts MFG. It trades about -0.15 of its total potential returns per unit of risk. YCC Parts MFG is currently generating about 0.13 per unit of volatility. If you would invest  5,480  in YCC Parts MFG on December 27, 2024 and sell it today you would earn a total of  360.00  from holding YCC Parts MFG or generate 6.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	91.67%
Values	Daily Returns

Hanesbrands  vs.  YCC Parts MFG

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 April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

YCC Parts MFG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in YCC Parts MFG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, YCC Parts may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Hanesbrands and YCC Parts

The main advantage of trading using opposite Hanesbrands and YCC Parts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, YCC Parts 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 YCC Parts will offset losses from the drop in YCC Parts' long position.

The idea behind Hanesbrands and YCC Parts MFG 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.