Correlation Between Hanesbrands and Invesco SP

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

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

Diversification Opportunities for Hanesbrands and Invesco SP

0.7

Correlation Coefficient

Hanesbrands  Invesco SP

Poor diversification

The 3 months correlation between Hanesbrands and Invesco is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Invesco SP MidCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP MidCap 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP MidCap has no effect on the direction of Hanesbrands i.e., Hanesbrands and Invesco SP go up and down completely randomly.

Pair Corralation between Hanesbrands and Invesco SP

Considering the 90-day investment horizon Hanesbrands is expected to under-perform the Invesco SP. In addition to that, Hanesbrands is 3.02 times more volatile than Invesco SP MidCap. It trades about -0.15 of its total potential returns per unit of risk. Invesco SP MidCap is currently generating about -0.07 per unit of volatility. If you would invest  11,613  in Invesco SP MidCap on December 27, 2024 and sell it today you would lose (527.00) from holding Invesco SP MidCap or give up 4.54% of portfolio value over 90 days.

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

Hanesbrands  vs.  Invesco SP MidCap

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 SP MidCap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco SP MidCap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Invesco SP is not utilizing all of its potentials. The new stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Hanesbrands and Invesco SP

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

The idea behind Hanesbrands and Invesco SP MidCap 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.