Correlation Between Shopify and Delta Apparel

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

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

Diversification Opportunities for Shopify and Delta Apparel

-0.6

Correlation Coefficient

Shopify  Delta Apparel

Excellent diversification

The 3 months correlation between Shopify and Delta is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Shopify and Delta Apparel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Apparel and Shopify 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 Shopify are associated (or correlated) with Delta Apparel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Apparel has no effect on the direction of Shopify i.e., Shopify and Delta Apparel go up and down completely randomly.

Pair Corralation between Shopify and Delta Apparel

If you would invest  7,987  in Shopify on October 26, 2024 and sell it today you would earn a total of  2,781  from holding Shopify or generate 34.82% return on investment over 90 days.

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

Shopify  vs.  Delta Apparel

Shopify

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shopify are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Shopify reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Shopify and Delta Apparel

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

The idea behind Shopify and Delta Apparel 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.