Correlation Between Hanesbrands and Tcw Select

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

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

Diversification Opportunities for Hanesbrands and Tcw Select

0.9

Correlation Coefficient

Hanesbrands  Tcw Select

Almost no diversification

The 3 months correlation between Hanesbrands and Tcw is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Tcw Select Equities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tcw Select Equities 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 Tcw Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tcw Select Equities has no effect on the direction of Hanesbrands i.e., Hanesbrands and Tcw Select go up and down completely randomly.

Pair Corralation between Hanesbrands and Tcw Select

Considering the 90-day investment horizon Hanesbrands is expected to generate 3.37 times more return on investment than Tcw Select. However, Hanesbrands is 3.37 times more volatile than Tcw Select Equities. It trades about 0.15 of its potential returns per unit of risk. Tcw Select Equities is currently generating about 0.19 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 Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Hanesbrands  vs.  Tcw Select Equities

Hanesbrands

Risk-Adjusted Performance

12 of 100

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.

Tcw Select Equities

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tcw Select Equities are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Tcw Select may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hanesbrands and Tcw Select

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

The idea behind Hanesbrands and Tcw Select Equities 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.