Correlation Between Hanesbrands and HSBC SP

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

By analyzing existing cross correlation between Hanesbrands and HSBC SP 500, you can compare the effects of market volatilities on Hanesbrands and HSBC SP 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 HSBC SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and HSBC SP.

Diversification Opportunities for Hanesbrands and HSBC SP

0.6

Correlation Coefficient

Hanesbrands  HSBC SP

Poor diversification

The 3 months correlation between Hanesbrands and HSBC is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and HSBC SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC SP 500 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 HSBC SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC SP 500 has no effect on the direction of Hanesbrands i.e., Hanesbrands and HSBC SP go up and down completely randomly.

Pair Corralation between Hanesbrands and HSBC SP

Considering the 90-day investment horizon Hanesbrands is expected to under-perform the HSBC SP. In addition to that, Hanesbrands is 3.01 times more volatile than HSBC SP 500. It trades about -0.16 of its total potential returns per unit of risk. HSBC SP 500 is currently generating about -0.13 per unit of volatility. If you would invest  5,733  in HSBC SP 500 on December 30, 2024 and sell it today you would lose (520.00) from holding HSBC SP 500 or give up 9.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.38%
Values	Daily Returns

Hanesbrands  vs.  HSBC SP 500

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.

HSBC SP 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days HSBC SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Hanesbrands and HSBC SP

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

The idea behind Hanesbrands and HSBC SP 500 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.