Correlation Between Hanesbrands and SHERWIN

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

By analyzing existing cross correlation between Hanesbrands and SHERWIN WILLIAMS 455 percent, you can compare the effects of market volatilities on Hanesbrands and SHERWIN 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 SHERWIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and SHERWIN.

Diversification Opportunities for Hanesbrands and SHERWIN

0.04

Correlation Coefficient

Hanesbrands  SHERWIN

Significant diversification

The 3 months correlation between Hanesbrands and SHERWIN is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and SHERWIN WILLIAMS 455 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHERWIN WILLIAMS 455 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 SHERWIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHERWIN WILLIAMS 455 has no effect on the direction of Hanesbrands i.e., Hanesbrands and SHERWIN go up and down completely randomly.

Pair Corralation between Hanesbrands and SHERWIN

Considering the 90-day investment horizon Hanesbrands is expected to generate 2.47 times more return on investment than SHERWIN. However, Hanesbrands is 2.47 times more volatile than SHERWIN WILLIAMS 455 percent. It trades about 0.17 of its potential returns per unit of risk. SHERWIN WILLIAMS 455 percent is currently generating about -0.02 per unit of risk. If you would invest  634.00  in Hanesbrands on September 3, 2024 and sell it today you would earn a total of  236.00  from holding Hanesbrands or generate 37.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	53.13%
Values	Daily Returns

Hanesbrands  vs.  SHERWIN WILLIAMS 455 percent

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.

SHERWIN WILLIAMS 455

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHERWIN WILLIAMS 455 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SHERWIN is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hanesbrands and SHERWIN

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

The idea behind Hanesbrands and SHERWIN WILLIAMS 455 percent 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.