Correlation Between Delta Air and Target Corp
Can any of the company-specific risk be diversified away by investing in both Delta Air and Target Corp 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 Target Corp 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 Target Corp, you can compare the effects of market volatilities on Delta Air and Target Corp 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 Target Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Target Corp.
Diversification Opportunities for Delta Air and Target Corp
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Delta and Target is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Target Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Corp 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 Target Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Corp has no effect on the direction of Delta Air i.e., Delta Air and Target Corp go up and down completely randomly.
Pair Corralation between Delta Air and Target Corp
Assuming the 90 days trading horizon Delta Air Lines is expected to generate 0.78 times more return on investment than Target Corp. However, Delta Air Lines is 1.28 times less risky than Target Corp. It trades about 0.09 of its potential returns per unit of risk. Target Corp is currently generating about -0.02 per unit of risk. If you would invest 5,057 in Delta Air Lines on September 1, 2024 and sell it today you would earn a total of 1,318 from holding Delta Air Lines or generate 26.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.23% |
| Values | Daily Returns |
Delta Air Lines vs. Target Corp
Performance |
| Timeline |
| Delta Air Lines |
| Target Corp |
Delta Air and Target Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Target Corp
The main advantage of trading using opposite Delta Air and Target Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Target Corp 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 Target Corp will offset losses from the drop in Target Corp's long position.| Delta Air vs. Induction Healthcare Group | Delta Air vs. CVS Health Corp | Delta Air vs. Federal Realty Investment | Delta Air vs. Optima Health plc |
| Target Corp vs. Uniper SE | Target Corp vs. Mulberry Group PLC | Target Corp vs. London Security Plc | Target Corp vs. Triad Group PLC |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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