Correlation Between Hanesbrands and Nalwa Sons

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

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

Diversification Opportunities for Hanesbrands and Nalwa Sons

0.76

Correlation Coefficient

Hanesbrands  Nalwa Sons

Poor diversification

The 3 months correlation between Hanesbrands and Nalwa is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Nalwa Sons Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nalwa Sons Investments 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 Nalwa Sons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nalwa Sons Investments has no effect on the direction of Hanesbrands i.e., Hanesbrands and Nalwa Sons go up and down completely randomly.

Pair Corralation between Hanesbrands and Nalwa Sons

Considering the 90-day investment horizon Hanesbrands is expected to under-perform the Nalwa Sons. But the stock apears to be less risky and, when comparing its historical volatility, Hanesbrands is 1.15 times less risky than Nalwa Sons. The stock trades about -0.16 of its potential returns per unit of risk. The Nalwa Sons Investments is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  761,595  in Nalwa Sons Investments on December 30, 2024 and sell it today you would lose (155,455) from holding Nalwa Sons Investments or give up 20.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Hanesbrands  vs.  Nalwa Sons Investments

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.

Nalwa Sons Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nalwa Sons Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Hanesbrands and Nalwa Sons

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

The idea behind Hanesbrands and Nalwa Sons Investments 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.