Correlation Between Hanesbrands and NextSource Materials
Can any of the company-specific risk be diversified away by investing in both Hanesbrands and NextSource Materials 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 NextSource Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and NextSource Materials, you can compare the effects of market volatilities on Hanesbrands and NextSource Materials 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 NextSource Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and NextSource Materials.
Diversification Opportunities for Hanesbrands and NextSource Materials
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hanesbrands and NextSource is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and NextSource Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextSource Materials 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 NextSource Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextSource Materials has no effect on the direction of Hanesbrands i.e., Hanesbrands and NextSource Materials go up and down completely randomly.
Pair Corralation between Hanesbrands and NextSource Materials
Considering the 90-day investment horizon Hanesbrands is expected to generate 0.79 times more return on investment than NextSource Materials. However, Hanesbrands is 1.27 times less risky than NextSource Materials. It trades about 0.13 of its potential returns per unit of risk. NextSource Materials is currently generating about -0.09 per unit of risk. If you would invest 676.00 in Hanesbrands on September 13, 2024 and sell it today you would earn a total of 165.00 from holding Hanesbrands or generate 24.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Hanesbrands vs. NextSource Materials
Performance |
Timeline |
Hanesbrands |
NextSource Materials |
Hanesbrands and NextSource Materials Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hanesbrands and NextSource Materials
The main advantage of trading using opposite Hanesbrands and NextSource Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, NextSource Materials 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 NextSource Materials will offset losses from the drop in NextSource Materials' 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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