Correlation Between Hanesbrands and Virtus International
Can any of the company-specific risk be diversified away by investing in both Hanesbrands and Virtus 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 Virtus International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanesbrands and Virtus International Small Cap, you can compare the effects of market volatilities on Hanesbrands and Virtus 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 Virtus International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanesbrands and Virtus International.
Diversification Opportunities for Hanesbrands and Virtus International
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hanesbrands and Virtus is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Virtus International Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus 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 Virtus International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus International has no effect on the direction of Hanesbrands i.e., Hanesbrands and Virtus International go up and down completely randomly.
Pair Corralation between Hanesbrands and Virtus International
Considering the 90-day investment horizon Hanesbrands is expected to generate 4.46 times more return on investment than Virtus International. However, Hanesbrands is 4.46 times more volatile than Virtus International Small Cap. It trades about 0.17 of its potential returns per unit of risk. Virtus International Small Cap is currently generating about 0.0 per unit of risk. If you would invest 632.00 in Hanesbrands on September 6, 2024 and sell it today you would earn a total of 226.00 from holding Hanesbrands or generate 35.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hanesbrands vs. Virtus International Small Cap
Performance |
Timeline |
Hanesbrands |
Virtus International |
Hanesbrands and Virtus International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hanesbrands and Virtus International
The main advantage of trading using opposite Hanesbrands and Virtus International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands position performs unexpectedly, Virtus 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 Virtus International will offset losses from the drop in Virtus International's long position.Hanesbrands vs. Ralph Lauren Corp | Hanesbrands vs. Levi Strauss Co | Hanesbrands vs. Under Armour C | Hanesbrands vs. PVH Corp |
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Check out your portfolio center.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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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