Correlation Between Delta Apparel and Hanesbrands

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

By analyzing existing cross correlation between Delta Apparel and Hanesbrands, you can compare the effects of market volatilities on Delta Apparel and Hanesbrands 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 Delta Apparel with a short position of Hanesbrands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Apparel and Hanesbrands.

Diversification Opportunities for Delta Apparel and Hanesbrands

-0.63

Correlation Coefficient

Delta Apparel  Hanesbrands

Excellent diversification

The 3 months correlation between Delta and Hanesbrands is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Delta Apparel and Hanesbrands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanesbrands and Delta Apparel 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 Delta Apparel are associated (or correlated) with Hanesbrands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanesbrands has no effect on the direction of Delta Apparel i.e., Delta Apparel and Hanesbrands go up and down completely randomly.

Pair Corralation between Delta Apparel and Hanesbrands

Considering the 90-day investment horizon Delta Apparel is expected to under-perform the Hanesbrands. But the stock apears to be less risky and, when comparing its historical volatility, Delta Apparel is 1.19 times less risky than Hanesbrands. The stock trades about -0.32 of its potential returns per unit of risk. The Hanesbrands is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest  544.00  in Hanesbrands on January 20, 2024 and sell it today you would lose (71.00) from holding Hanesbrands or give up 13.05% of portfolio value over 90 days.

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

Delta Apparel  vs.  Hanesbrands

Delta Apparel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delta Apparel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Hanesbrands

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hanesbrands are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental drivers, Hanesbrands demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delta Apparel and Hanesbrands

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

The idea behind Delta Apparel and Hanesbrands 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.