Correlation Between Hanesbrands and Diamond Hill

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

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

Diversification Opportunities for Hanesbrands and Diamond Hill

-0.42

Correlation Coefficient

Hanesbrands  Diamond Hill

Very good diversification

The 3 months correlation between Hanesbrands and Diamond is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Diamond Hill E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill E 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 Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill E has no effect on the direction of Hanesbrands i.e., Hanesbrands and Diamond Hill go up and down completely randomly.

Pair Corralation between Hanesbrands and Diamond Hill

Considering the 90-day investment horizon Hanesbrands is expected to under-perform the Diamond Hill. In addition to that, Hanesbrands is 11.14 times more volatile than Diamond Hill E. It trades about -0.18 of its total potential returns per unit of risk. Diamond Hill E is currently generating about 0.06 per unit of volatility. If you would invest  905.00  in Diamond Hill E on December 1, 2024 and sell it today you would earn a total of  10.00  from holding Diamond Hill E or generate 1.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Hanesbrands  vs.  Diamond Hill E

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.

Diamond Hill E

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Diamond Hill E are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Diamond Hill is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hanesbrands and Diamond Hill

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

The idea behind Hanesbrands and Diamond Hill E 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.