Correlation Between Delta Apparel and Hasbro

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

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

Diversification Opportunities for Delta Apparel and Hasbro

-0.56

Correlation Coefficient

Delta Apparel  Hasbro

Excellent diversification

The 3 months correlation between Delta and Hasbro is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Delta Apparel and Hasbro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hasbro Inc 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 Hasbro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hasbro Inc has no effect on the direction of Delta Apparel i.e., Delta Apparel and Hasbro go up and down completely randomly.

Pair Corralation between Delta Apparel and Hasbro

Considering the 90-day investment horizon Delta Apparel is expected to under-perform the Hasbro. In addition to that, Delta Apparel is 1.03 times more volatile than Hasbro Inc. It trades about -0.26 of its total potential returns per unit of risk. Hasbro Inc is currently generating about 0.22 per unit of volatility. If you would invest  5,626  in Hasbro Inc on January 30, 2024 and sell it today you would earn a total of  772.00  from holding Hasbro Inc or generate 13.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Delta Apparel  vs.  Hasbro Inc

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 fragile 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.

Hasbro Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hasbro Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Hasbro unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delta Apparel and Hasbro

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

The idea behind Delta Apparel and Hasbro Inc 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .