Correlation Between Hanesbrands and New Nordic

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

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

Diversification Opportunities for Hanesbrands and New Nordic

-0.21

Correlation Coefficient

Hanesbrands  New Nordic

Very good diversification

The 3 months correlation between Hanesbrands and New is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and New Nordic Healthbrands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Nordic Healthbrands 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 New Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Nordic Healthbrands has no effect on the direction of Hanesbrands i.e., Hanesbrands and New Nordic go up and down completely randomly.

Pair Corralation between Hanesbrands and New Nordic

Considering the 90-day investment horizon Hanesbrands is expected to under-perform the New Nordic. In addition to that, Hanesbrands is 1.41 times more volatile than New Nordic Healthbrands. It trades about -0.16 of its total potential returns per unit of risk. New Nordic Healthbrands is currently generating about -0.04 per unit of volatility. If you would invest  1,500  in New Nordic Healthbrands on December 29, 2024 and sell it today you would lose (110.00) from holding New Nordic Healthbrands or give up 7.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Hanesbrands  vs.  New Nordic Healthbrands

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.

New Nordic Healthbrands

Risk-Adjusted Performance

Very Weak

Over the last 90 days New Nordic Healthbrands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, New Nordic is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Hanesbrands and New Nordic

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

The idea behind Hanesbrands and New Nordic Healthbrands 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.