Correlation Between Hanesbrands and Madison Pacific
Can any of the company-specific risk be diversified away by investing in both Hanesbrands and Madison Pacific 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 Madison Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and Madison Pacific Properties, you can compare the effects of market volatilities on Hanesbrands and Madison Pacific 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 Madison Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and Madison Pacific.
Diversification Opportunities for Hanesbrands and Madison Pacific
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hanesbrands and Madison is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Madison Pacific Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Pacific Prop 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 Madison Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Pacific Prop has no effect on the direction of Hanesbrands i.e., Hanesbrands and Madison Pacific go up and down completely randomly.
Pair Corralation between Hanesbrands and Madison Pacific
Considering the 90-day investment horizon Hanesbrands is expected to generate 1.94 times more return on investment than Madison Pacific. However, Hanesbrands is 1.94 times more volatile than Madison Pacific Properties. It trades about 0.05 of its potential returns per unit of risk. Madison Pacific Properties is currently generating about -0.04 per unit of risk. If you would invest 490.00 in Hanesbrands on September 11, 2024 and sell it today you would earn a total of 347.00 from holding Hanesbrands or generate 70.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Hanesbrands vs. Madison Pacific Properties
Performance |
Timeline |
Hanesbrands |
Madison Pacific Prop |
Hanesbrands and Madison Pacific Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hanesbrands and Madison Pacific
The main advantage of trading using opposite Hanesbrands and Madison Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, Madison Pacific 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 Madison Pacific will offset losses from the drop in Madison Pacific'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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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