Correlation Between Hanesbrands and Aura Investments

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

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

Diversification Opportunities for Hanesbrands and Aura Investments

0.33

Correlation Coefficient

Hanesbrands  Aura Investments

Weak diversification

The 3 months correlation between Hanesbrands and Aura is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Aura Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aura Investments 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 Aura Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aura Investments has no effect on the direction of Hanesbrands i.e., Hanesbrands and Aura Investments go up and down completely randomly.

Pair Corralation between Hanesbrands and Aura Investments

Considering the 90-day investment horizon Hanesbrands is expected to under-perform the Aura Investments. In addition to that, Hanesbrands is 1.3 times more volatile than Aura Investments. It trades about -0.16 of its total potential returns per unit of risk. Aura Investments is currently generating about -0.14 per unit of volatility. If you would invest  214,500  in Aura Investments on December 30, 2024 and sell it today you would lose (37,000) from holding Aura Investments or give up 17.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	83.87%
Values	Daily Returns

Hanesbrands  vs.  Aura Investments

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.

Aura Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aura Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hanesbrands and Aura Investments

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

The idea behind Hanesbrands and Aura Investments 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.