Correlation Between Hanesbrands and Rbc Smid

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

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

Diversification Opportunities for Hanesbrands and Rbc Smid

0.64

Correlation Coefficient

Hanesbrands  Rbc Smid

Poor diversification

The 3 months correlation between Hanesbrands and Rbc is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Rbc Smid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rbc Smid Cap 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 Rbc Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rbc Smid Cap has no effect on the direction of Hanesbrands i.e., Hanesbrands and Rbc Smid go up and down completely randomly.

Pair Corralation between Hanesbrands and Rbc Smid

Considering the 90-day investment horizon Hanesbrands is expected to generate 3.32 times more return on investment than Rbc Smid. However, Hanesbrands is 3.32 times more volatile than Rbc Smid Cap. It trades about 0.23 of its potential returns per unit of risk. Rbc Smid Cap is currently generating about 0.22 per unit of risk. If you would invest  712.00  in Hanesbrands on September 5, 2024 and sell it today you would earn a total of  155.00  from holding Hanesbrands or generate 21.77% return on investment over 90 days.

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

Hanesbrands  vs.  Rbc Smid Cap

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.

Rbc Smid Cap

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Rbc Smid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak basic indicators, Rbc Smid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hanesbrands and Rbc Smid

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

The idea behind Hanesbrands and Rbc Smid Cap 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 Commodity Directory module to find actively traded commodities issued by global exchanges.