Correlation Between Hanesbrands and Transamerica Large

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

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

Diversification Opportunities for Hanesbrands and Transamerica Large

0.47

Correlation Coefficient

Hanesbrands  Transamerica Large

Very weak diversification

The 3 months correlation between Hanesbrands and Transamerica is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Transamerica Large Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Large Core 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 Transamerica Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Large Core has no effect on the direction of Hanesbrands i.e., Hanesbrands and Transamerica Large go up and down completely randomly.

Pair Corralation between Hanesbrands and Transamerica Large

Considering the 90-day investment horizon Hanesbrands is expected to under-perform the Transamerica Large. In addition to that, Hanesbrands is 6.86 times more volatile than Transamerica Large Core. It trades about -0.27 of its total potential returns per unit of risk. Transamerica Large Core is currently generating about -0.18 per unit of volatility. If you would invest  1,133  in Transamerica Large Core on December 2, 2024 and sell it today you would lose (30.00) from holding Transamerica Large Core or give up 2.65% of portfolio value over 90 days.

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

Hanesbrands  vs.  Transamerica Large Core

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.

Transamerica Large Core

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transamerica Large Core has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Hanesbrands and Transamerica Large

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

The idea behind Hanesbrands and Transamerica Large Core 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.