Correlation Between Hanesbrands and Oxford Industries

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

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

Diversification Opportunities for Hanesbrands and Oxford Industries

0.64

Correlation Coefficient

Hanesbrands  Oxford Industries

Poor diversification

The 3 months correlation between Hanesbrands and Oxford is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Oxford Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Industries 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 Oxford Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Industries has no effect on the direction of Hanesbrands i.e., Hanesbrands and Oxford Industries go up and down completely randomly.

Pair Corralation between Hanesbrands and Oxford Industries

Considering the 90-day investment horizon Hanesbrands is expected to generate 1.66 times more return on investment than Oxford Industries. However, Hanesbrands is 1.66 times more volatile than Oxford Industries. It trades about 0.02 of its potential returns per unit of risk. Oxford Industries is currently generating about -0.01 per unit of risk. If you would invest  820.00  in Hanesbrands on October 8, 2024 and sell it today you would earn a total of  4.00  from holding Hanesbrands or generate 0.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Hanesbrands  vs.  Oxford Industries

Hanesbrands

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hanesbrands are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting fundamental drivers, Hanesbrands demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Oxford Industries

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oxford Industries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Oxford Industries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hanesbrands and Oxford Industries

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

The idea behind Hanesbrands and Oxford Industries 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.