Correlation Between Hanesbrands and Sibanye Stillwater

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

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

Diversification Opportunities for Hanesbrands and Sibanye Stillwater

0.33

Correlation Coefficient

Hanesbrands  Sibanye Stillwater

Weak diversification

The 3 months correlation between Hanesbrands and Sibanye is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Sibanye Stillwater Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sibanye Stillwater 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 Sibanye Stillwater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sibanye Stillwater has no effect on the direction of Hanesbrands i.e., Hanesbrands and Sibanye Stillwater go up and down completely randomly.

Pair Corralation between Hanesbrands and Sibanye Stillwater

Considering the 90-day investment horizon Hanesbrands is expected to generate 0.66 times more return on investment than Sibanye Stillwater. However, Hanesbrands is 1.52 times less risky than Sibanye Stillwater. It trades about 0.17 of its potential returns per unit of risk. Sibanye Stillwater Limited is currently generating about 0.07 per unit of risk. If you would invest  638.00  in Hanesbrands on September 5, 2024 and sell it today you would earn a total of  229.00  from holding Hanesbrands or generate 35.89% return on investment over 90 days.

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

Hanesbrands  vs.  Sibanye Stillwater Limited

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.

Sibanye Stillwater

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sibanye Stillwater Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sibanye Stillwater reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hanesbrands and Sibanye Stillwater

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

The idea behind Hanesbrands and Sibanye Stillwater Limited 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.