Correlation Between ThredUp and Delta Apparel

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

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

Diversification Opportunities for ThredUp and Delta Apparel

-0.84

Correlation Coefficient

ThredUp  Delta Apparel

Pay attention - limited upside

The 3 months correlation between ThredUp and Delta is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding ThredUp and Delta Apparel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Apparel and ThredUp 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 ThredUp 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 ThredUp i.e., ThredUp and Delta Apparel go up and down completely randomly.

Pair Corralation between ThredUp and Delta Apparel

Given the investment horizon of 90 days ThredUp is expected to generate 0.99 times more return on investment than Delta Apparel. However, ThredUp is 1.01 times less risky than Delta Apparel. It trades about 0.03 of its potential returns per unit of risk. Delta Apparel is currently generating about -0.12 per unit of risk. If you would invest  182.00  in ThredUp on October 11, 2024 and sell it today you would lose (48.00) from holding ThredUp or give up 26.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	73.59%
Values	Daily Returns

ThredUp  vs.  Delta Apparel

ThredUp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ThredUp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, ThredUp 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 ThredUp and Delta Apparel

The main advantage of trading using opposite ThredUp and Delta Apparel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ThredUp 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 ThredUp 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.