Correlation Between Hanesbrands and Alliance Recovery
Can any of the company-specific risk be diversified away by investing in both Hanesbrands and Alliance Recovery 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 Alliance Recovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and Alliance Recovery, you can compare the effects of market volatilities on Hanesbrands and Alliance Recovery 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 Alliance Recovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and Alliance Recovery.
Diversification Opportunities for Hanesbrands and Alliance Recovery
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hanesbrands and Alliance is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Alliance Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Recovery 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 Alliance Recovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Recovery has no effect on the direction of Hanesbrands i.e., Hanesbrands and Alliance Recovery go up and down completely randomly.
Pair Corralation between Hanesbrands and Alliance Recovery
Considering the 90-day investment horizon Hanesbrands is expected to under-perform the Alliance Recovery. But the stock apears to be less risky and, when comparing its historical volatility, Hanesbrands is 3.29 times less risky than Alliance Recovery. The stock trades about -0.16 of its potential returns per unit of risk. The Alliance Recovery is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.21 in Alliance Recovery on December 30, 2024 and sell it today you would earn a total of 0.06 from holding Alliance Recovery or generate 28.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 95.38% |
Values | Daily Returns |
Hanesbrands vs. Alliance Recovery
Performance |
Timeline |
Hanesbrands |
Alliance Recovery |
Hanesbrands and Alliance Recovery Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hanesbrands and Alliance Recovery
The main advantage of trading using opposite Hanesbrands and Alliance Recovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, Alliance Recovery 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 Alliance Recovery will offset losses from the drop in Alliance Recovery's long position.Hanesbrands vs. Ralph Lauren Corp | Hanesbrands vs. Levi Strauss Co | Hanesbrands vs. Under Armour C | Hanesbrands vs. PVH Corp |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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