Correlation Between Delta Air and Future Metals
Can any of the company-specific risk be diversified away by investing in both Delta Air and Future Metals 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 Future Metals 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 Future Metals NL, you can compare the effects of market volatilities on Delta Air and Future Metals 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 Future Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Future Metals.
Diversification Opportunities for Delta Air and Future Metals
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Delta and Future is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Future Metals NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Future Metals NL 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 Future Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Future Metals NL has no effect on the direction of Delta Air i.e., Delta Air and Future Metals go up and down completely randomly.
Pair Corralation between Delta Air and Future Metals
Assuming the 90 days trading horizon Delta Air Lines is expected to generate 0.79 times more return on investment than Future Metals. However, Delta Air Lines is 1.27 times less risky than Future Metals. It trades about 0.24 of its potential returns per unit of risk. Future Metals NL is currently generating about -0.3 per unit of risk. If you would invest 5,716 in Delta Air Lines on September 1, 2024 and sell it today you would earn a total of 659.00 from holding Delta Air Lines or generate 11.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. Future Metals NL
Performance |
| Timeline |
| Delta Air Lines |
| Future Metals NL |
Delta Air and Future Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Future Metals
The main advantage of trading using opposite Delta Air and Future Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Future Metals 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 Future Metals will offset losses from the drop in Future Metals' 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 |
| Future Metals vs. Givaudan SA | Future Metals vs. Antofagasta PLC | Future Metals vs. Centamin PLC | Future Metals vs. Atalaya Mining |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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