Correlation Between Delta Apparel and Kontoor Brands

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

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

Diversification Opportunities for Delta Apparel and Kontoor Brands

-0.29

Correlation Coefficient

Delta Apparel  Kontoor Brands

Very good diversification

The 3 months correlation between Delta and Kontoor is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Delta Apparel and Kontoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kontoor Brands 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 Kontoor Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kontoor Brands has no effect on the direction of Delta Apparel i.e., Delta Apparel and Kontoor Brands go up and down completely randomly.

Pair Corralation between Delta Apparel and Kontoor Brands

If you would invest  7,644  in Kontoor Brands on October 25, 2024 and sell it today you would earn a total of  1,243  from holding Kontoor Brands or generate 16.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

Delta Apparel  vs.  Kontoor Brands

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 somewhat strong essential indicators, Delta Apparel is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Kontoor Brands

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kontoor Brands are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Kontoor Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delta Apparel and Kontoor Brands

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

The idea behind Delta Apparel and Kontoor Brands 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.