Correlation Between Hanesbrands and Peoples Insurance

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Can any of the company-specific risk be diversified away by investing in both Hanesbrands and Peoples Insurance 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 Peoples Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and Peoples Insurance of, you can compare the effects of market volatilities on Hanesbrands and Peoples Insurance 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 Peoples Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and Peoples Insurance.

Diversification Opportunities for Hanesbrands and Peoples Insurance

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Hanesbrands and Peoples is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Peoples Insurance of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Insurance 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 Peoples Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Insurance has no effect on the direction of Hanesbrands i.e., Hanesbrands and Peoples Insurance go up and down completely randomly.

Pair Corralation between Hanesbrands and Peoples Insurance

Considering the 90-day investment horizon Hanesbrands is expected to generate 1.06 times more return on investment than Peoples Insurance. However, Hanesbrands is 1.06 times more volatile than Peoples Insurance of. It trades about 0.15 of its potential returns per unit of risk. Peoples Insurance of is currently generating about 0.15 per unit of risk. If you would invest  640.00  in Hanesbrands on September 12, 2024 and sell it today you would earn a total of  201.00  from holding Hanesbrands or generate 31.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy90.48%
ValuesDaily Returns

Hanesbrands  vs.  Peoples Insurance of

 Performance 
       Timeline  
Hanesbrands 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Hanesbrands are ranked lower than 12 (%) 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.
Peoples Insurance 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Peoples Insurance of are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Peoples Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Hanesbrands and Peoples Insurance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hanesbrands and Peoples Insurance

The main advantage of trading using opposite Hanesbrands and Peoples Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, Peoples Insurance 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 Peoples Insurance will offset losses from the drop in Peoples Insurance's long position.
The idea behind Hanesbrands and Peoples Insurance of 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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