Correlation Between H M and Hanesbrands

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

By analyzing existing cross correlation between H M Hennes and Hanesbrands, you can compare the effects of market volatilities on H M and Hanesbrands 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 H M with a short position of Hanesbrands. Check out your portfolio center. Please also check ongoing floating volatility patterns of H M and Hanesbrands.

Diversification Opportunities for H M and Hanesbrands

-0.03

Correlation Coefficient

H M  Hanesbrands

Good diversification

The 3 months correlation between HNNMY and Hanesbrands is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding H M Hennes and Hanesbrands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanesbrands and H M 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 H M Hennes are associated (or correlated) with Hanesbrands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanesbrands has no effect on the direction of H M i.e., H M and Hanesbrands go up and down completely randomly.

Pair Corralation between H M and Hanesbrands

Assuming the 90 days horizon H M Hennes is expected to generate 0.58 times more return on investment than Hanesbrands. However, H M Hennes is 1.74 times less risky than Hanesbrands. It trades about 0.0 of its potential returns per unit of risk. Hanesbrands is currently generating about -0.14 per unit of risk. If you would invest  270.00  in H M Hennes on December 20, 2024 and sell it today you would lose (4.00) from holding H M Hennes or give up 1.48% of portfolio value over 90 days.

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

H M Hennes  vs.  Hanesbrands

H M Hennes

Risk-Adjusted Performance

Very Weak

Over the last 90 days H M Hennes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, H M is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with H M and Hanesbrands

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

The idea behind H M Hennes and Hanesbrands 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.