Correlation Between Delta Air and Air Products
Can any of the company-specific risk be diversified away by investing in both Delta Air and Air Products 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 Air and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delta Air Lines and Air Products Chemicals, you can compare the effects of market volatilities on Delta Air and Air Products 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 Air with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Air Products.
Diversification Opportunities for Delta Air and Air Products
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Delta and Air is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Air Products Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products Chemicals and Delta Air 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 Air Lines are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products Chemicals has no effect on the direction of Delta Air i.e., Delta Air and Air Products go up and down completely randomly.
Pair Corralation between Delta Air and Air Products
Assuming the 90 days trading horizon Delta Air is expected to generate 1.28 times less return on investment than Air Products. But when comparing it to its historical volatility, Delta Air Lines is 3.47 times less risky than Air Products. It trades about 0.11 of its potential returns per unit of risk. Air Products Chemicals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 26,519 in Air Products Chemicals on August 27, 2024 and sell it today you would earn a total of 6,552 from holding Air Products Chemicals or generate 24.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Delta Air Lines vs. Air Products Chemicals
Performance |
| Timeline |
| Delta Air Lines |
| Air Products Chemicals |
Delta Air and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Air Products
The main advantage of trading using opposite Delta Air and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| Delta Air vs. Beowulf Mining | Delta Air vs. Lundin Mining Corp | Delta Air vs. Seche Environnement SA | Delta Air vs. Dentsply Sirona |
| Air Products vs. Samsung Electronics Co | Air Products vs. Samsung Electronics Co | Air Products vs. Hyundai Motor | Air Products vs. Toyota Motor Corp |
Check out your portfolio center.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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |