Correlation Between Delta Air and BW Offshore
Can any of the company-specific risk be diversified away by investing in both Delta Air and BW Offshore 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 BW Offshore 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 BW Offshore, you can compare the effects of market volatilities on Delta Air and BW Offshore 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 BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and BW Offshore.
Diversification Opportunities for Delta Air and BW Offshore
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Delta and 0RKH is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore 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 BW Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Offshore has no effect on the direction of Delta Air i.e., Delta Air and BW Offshore go up and down completely randomly.
Pair Corralation between Delta Air and BW Offshore
Assuming the 90 days trading horizon Delta Air Lines is expected to generate 1.08 times more return on investment than BW Offshore. However, Delta Air is 1.08 times more volatile than BW Offshore. It trades about 0.06 of its potential returns per unit of risk. BW Offshore is currently generating about 0.03 per unit of risk. If you would invest 5,057 in Delta Air Lines on November 28, 2024 and sell it today you would earn a total of 1,039 from holding Delta Air Lines or generate 20.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. BW Offshore
Performance |
| Timeline |
| Delta Air Lines |
| BW Offshore |
Delta Air and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and BW Offshore
The main advantage of trading using opposite Delta Air and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, BW Offshore 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 BW Offshore will offset losses from the drop in BW Offshore's long position.| Delta Air vs. Fresenius Medical Care | Delta Air vs. National Beverage Corp | Delta Air vs. Grieg Seafood | Delta Air vs. Edita Food Industries |
| BW Offshore vs. Fair Oaks Income | BW Offshore vs. Power Metal Resources | BW Offshore vs. GreenX Metals | BW Offshore vs. Science in Sport |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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