Correlation Between Hanesbrands and Weitz Balanced

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

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

Diversification Opportunities for Hanesbrands and Weitz Balanced

0.18

Correlation Coefficient

Hanesbrands  Weitz Balanced

Average diversification

The 3 months correlation between Hanesbrands and Weitz is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Weitz Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weitz Balanced 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 Weitz Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weitz Balanced has no effect on the direction of Hanesbrands i.e., Hanesbrands and Weitz Balanced go up and down completely randomly.

Pair Corralation between Hanesbrands and Weitz Balanced

Considering the 90-day investment horizon Hanesbrands is expected to under-perform the Weitz Balanced. In addition to that, Hanesbrands is 9.08 times more volatile than Weitz Balanced. It trades about -0.16 of its total potential returns per unit of risk. Weitz Balanced is currently generating about 0.0 per unit of volatility. If you would invest  1,689  in Weitz Balanced on December 30, 2024 and sell it today you would earn a total of  1.00  from holding Weitz Balanced or generate 0.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Hanesbrands  vs.  Weitz Balanced

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.

Weitz Balanced

Risk-Adjusted Performance

Very Weak

Over the last 90 days Weitz Balanced has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Weitz Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hanesbrands and Weitz Balanced

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

The idea behind Hanesbrands and Weitz Balanced 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.