Correlation Between Hanesbrands and Invesco NASDAQ

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

By analyzing existing cross correlation between Hanesbrands and Invesco NASDAQ 100, you can compare the effects of market volatilities on Hanesbrands and Invesco NASDAQ 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 Invesco NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and Invesco NASDAQ.

Diversification Opportunities for Hanesbrands and Invesco NASDAQ

0.67

Correlation Coefficient

Hanesbrands  Invesco NASDAQ

Poor diversification

The 3 months correlation between Hanesbrands and Invesco is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Invesco NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco NASDAQ 100 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 Invesco NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco NASDAQ 100 has no effect on the direction of Hanesbrands i.e., Hanesbrands and Invesco NASDAQ go up and down completely randomly.

Pair Corralation between Hanesbrands and Invesco NASDAQ

Considering the 90-day investment horizon Hanesbrands is expected to under-perform the Invesco NASDAQ. In addition to that, Hanesbrands is 2.35 times more volatile than Invesco NASDAQ 100. It trades about -0.16 of its total potential returns per unit of risk. Invesco NASDAQ 100 is currently generating about -0.1 per unit of volatility. If you would invest  3,611  in Invesco NASDAQ 100 on December 30, 2024 and sell it today you would lose (332.00) from holding Invesco NASDAQ 100 or give up 9.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

Hanesbrands  vs.  Invesco NASDAQ 100

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.

Invesco NASDAQ 100

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco NASDAQ 100 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with Hanesbrands and Invesco NASDAQ

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

The idea behind Hanesbrands and Invesco NASDAQ 100 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 Commodity Directory module to find actively traded commodities issued by global exchanges.