Correlation Between Hanesbrands and Payden Floating

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

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

Diversification Opportunities for Hanesbrands and Payden Floating

0.85

Correlation Coefficient

Hanesbrands  Payden Floating

Very poor diversification

The 3 months correlation between Hanesbrands and Payden is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Payden Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Floating Rate 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 Payden Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Floating Rate has no effect on the direction of Hanesbrands i.e., Hanesbrands and Payden Floating go up and down completely randomly.

Pair Corralation between Hanesbrands and Payden Floating

Considering the 90-day investment horizon Hanesbrands is expected to generate 31.41 times more return on investment than Payden Floating. However, Hanesbrands is 31.41 times more volatile than Payden Floating Rate. It trades about 0.13 of its potential returns per unit of risk. Payden Floating Rate is currently generating about 0.32 per unit of risk. If you would invest  676.00  in Hanesbrands on September 13, 2024 and sell it today you would earn a total of  165.00  from holding Hanesbrands or generate 24.41% return on investment over 90 days.

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

Hanesbrands  vs.  Payden Floating Rate

Hanesbrands

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hanesbrands are ranked lower than 10 (%) 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.

Payden Floating Rate

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Payden Floating Rate are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Payden Floating 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 Payden Floating

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

The idea behind Hanesbrands and Payden Floating Rate 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.