Correlation Between Hanesbrands and Invesco International

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

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

Diversification Opportunities for Hanesbrands and Invesco International

-0.2

Correlation Coefficient

Hanesbrands  Invesco International

Good diversification

The 3 months correlation between Hanesbrands and Invesco is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Invesco International Develope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco International 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 Invesco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco International has no effect on the direction of Hanesbrands i.e., Hanesbrands and Invesco International go up and down completely randomly.

Pair Corralation between Hanesbrands and Invesco International

Considering the 90-day investment horizon Hanesbrands is expected to generate 5.34 times more return on investment than Invesco International. However, Hanesbrands is 5.34 times more volatile than Invesco International Developed. It trades about 0.17 of its potential returns per unit of risk. Invesco International Developed is currently generating about 0.01 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 Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Hanesbrands  vs.  Invesco International Develope

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.

Invesco International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco International Developed has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong primary indicators, Invesco International 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 Invesco International

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

The idea behind Hanesbrands and Invesco International Developed 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.