Correlation Between Delta Air and Sparebank
Can any of the company-specific risk be diversified away by investing in both Delta Air and Sparebank 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 Sparebank 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 Sparebank 1 SR, you can compare the effects of market volatilities on Delta Air and Sparebank 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 Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Sparebank.
Diversification Opportunities for Delta Air and Sparebank
Poor diversification
The 3 months correlation between Delta and Sparebank is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Sparebank 1 SR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 SR 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 Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebank 1 SR has no effect on the direction of Delta Air i.e., Delta Air and Sparebank go up and down completely randomly.
Pair Corralation between Delta Air and Sparebank
Assuming the 90 days trading horizon Delta Air Lines is expected to generate 2.05 times more return on investment than Sparebank. However, Delta Air is 2.05 times more volatile than Sparebank 1 SR. It trades about 0.07 of its potential returns per unit of risk. Sparebank 1 SR is currently generating about 0.08 per unit of risk. If you would invest 3,392 in Delta Air Lines on November 27, 2024 and sell it today you would earn a total of 2,789 from holding Delta Air Lines or generate 82.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.15% |
| Values | Daily Returns |
Delta Air Lines vs. Sparebank 1 SR
Performance |
| Timeline |
| Delta Air Lines |
| Sparebank 1 SR |
Delta Air and Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Sparebank
The main advantage of trading using opposite Delta Air and Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Sparebank 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 Sparebank will offset losses from the drop in Sparebank's long position.| Delta Air vs. Kinnevik Investment AB | Delta Air vs. Vietnam Enterprise Investments | Delta Air vs. New Residential Investment | Delta Air vs. BlackRock Frontiers Investment |
| Sparebank vs. Verizon Communications | Sparebank vs. Cairo Communication SpA | Sparebank vs. Livermore Investments Group | Sparebank vs. Bigblu Broadband 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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