Correlation Between Hanesbrands and Entourage Health

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

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

Diversification Opportunities for Hanesbrands and Entourage Health

0.63

Correlation Coefficient

Hanesbrands  Entourage Health

Poor diversification

The 3 months correlation between Hanesbrands and Entourage is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Entourage Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entourage Health Corp 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 Entourage Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entourage Health Corp has no effect on the direction of Hanesbrands i.e., Hanesbrands and Entourage Health go up and down completely randomly.

Pair Corralation between Hanesbrands and Entourage Health

Considering the 90-day investment horizon Hanesbrands is expected to under-perform the Entourage Health. But the stock apears to be less risky and, when comparing its historical volatility, Hanesbrands is 3.94 times less risky than Entourage Health. The stock trades about -0.17 of its potential returns per unit of risk. The Entourage Health Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  0.45  in Entourage Health Corp on December 2, 2024 and sell it today you would lose (0.15) from holding Entourage Health Corp or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.56%
Values	Daily Returns

Hanesbrands  vs.  Entourage Health Corp

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.

Entourage Health Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Entourage Health Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Hanesbrands and Entourage Health

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

The idea behind Hanesbrands and Entourage Health Corp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.