Correlation Between Hanesbrands and Third Coast

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

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

Diversification Opportunities for Hanesbrands and Third Coast

0.82

Correlation Coefficient

Hanesbrands  Third Coast

Very poor diversification

The 3 months correlation between Hanesbrands and Third is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Third Coast Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Third Coast Bancshares 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 Third Coast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Third Coast Bancshares has no effect on the direction of Hanesbrands i.e., Hanesbrands and Third Coast go up and down completely randomly.

Pair Corralation between Hanesbrands and Third Coast

Considering the 90-day investment horizon Hanesbrands is expected to generate 1.53 times more return on investment than Third Coast. However, Hanesbrands is 1.53 times more volatile than Third Coast Bancshares. It trades about 0.18 of its potential returns per unit of risk. Third Coast Bancshares is currently generating about 0.26 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	100.0%
Values	Daily Returns

Hanesbrands  vs.  Third Coast Bancshares

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.

Third Coast Bancshares

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Third Coast Bancshares are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Third Coast showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hanesbrands and Third Coast

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

The idea behind Hanesbrands and Third Coast Bancshares 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.