Correlation Between Hanesbrands and Peyto ExplorationDevel

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

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

Diversification Opportunities for Hanesbrands and Peyto ExplorationDevel

0.86

Correlation Coefficient

Hanesbrands  Peyto ExplorationDevel

Very poor diversification

The 3 months correlation between Hanesbrands and Peyto is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Peyto ExplorationDevelopment C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peyto ExplorationDevel 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 Peyto ExplorationDevel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peyto ExplorationDevel has no effect on the direction of Hanesbrands i.e., Hanesbrands and Peyto ExplorationDevel go up and down completely randomly.

Pair Corralation between Hanesbrands and Peyto ExplorationDevel

Considering the 90-day investment horizon Hanesbrands is expected to generate 2.21 times more return on investment than Peyto ExplorationDevel. However, Hanesbrands is 2.21 times more volatile than Peyto ExplorationDevelopment Corp. It trades about 0.18 of its potential returns per unit of risk. Peyto ExplorationDevelopment Corp is currently generating about 0.2 per unit of risk. If you would invest  645.00  in Hanesbrands on September 4, 2024 and sell it today you would earn a total of  246.00  from holding Hanesbrands or generate 38.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Hanesbrands  vs.  Peyto ExplorationDevelopment C

Hanesbrands

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hanesbrands are ranked lower than 13 (%) 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.

Peyto ExplorationDevel

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Peyto ExplorationDevelopment Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Peyto ExplorationDevel displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hanesbrands and Peyto ExplorationDevel

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

The idea behind Hanesbrands and Peyto ExplorationDevelopment Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.