Correlation Between Hanesbrands and Wave Entertainment

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

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

Diversification Opportunities for Hanesbrands and Wave Entertainment

-0.17

Correlation Coefficient

Hanesbrands  Wave Entertainment

Good diversification

The 3 months correlation between Hanesbrands and Wave is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands and Wave Entertainment Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wave Entertainment Public 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 Wave Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wave Entertainment Public has no effect on the direction of Hanesbrands i.e., Hanesbrands and Wave Entertainment go up and down completely randomly.

Pair Corralation between Hanesbrands and Wave Entertainment

Considering the 90-day investment horizon Hanesbrands is expected to generate 0.58 times more return on investment than Wave Entertainment. However, Hanesbrands is 1.73 times less risky than Wave Entertainment. It trades about 0.17 of its potential returns per unit of risk. Wave Entertainment Public is currently generating about -0.03 per unit of risk. If you would invest  638.00  in Hanesbrands on September 5, 2024 and sell it today you would earn a total of  229.00  from holding Hanesbrands or generate 35.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Hanesbrands  vs.  Wave Entertainment Public

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.

Wave Entertainment Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wave Entertainment Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Hanesbrands and Wave Entertainment

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

The idea behind Hanesbrands and Wave Entertainment Public 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.