Correlation Between Delta Air and Lindsell Train
Can any of the company-specific risk be diversified away by investing in both Delta Air and Lindsell Train 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 Lindsell Train 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 Lindsell Train Investment, you can compare the effects of market volatilities on Delta Air and Lindsell Train 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 Lindsell Train. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Lindsell Train.
Diversification Opportunities for Delta Air and Lindsell Train
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Delta and Lindsell is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Lindsell Train Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindsell Train Investment 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 Lindsell Train. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindsell Train Investment has no effect on the direction of Delta Air i.e., Delta Air and Lindsell Train go up and down completely randomly.
Pair Corralation between Delta Air and Lindsell Train
Assuming the 90 days trading horizon Delta Air Lines is expected to generate 1.58 times more return on investment than Lindsell Train. However, Delta Air is 1.58 times more volatile than Lindsell Train Investment. It trades about 0.02 of its potential returns per unit of risk. Lindsell Train Investment is currently generating about 0.01 per unit of risk. If you would invest 6,318 in Delta Air Lines on September 13, 2024 and sell it today you would earn a total of 35.00 from holding Delta Air Lines or generate 0.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. Lindsell Train Investment
Performance |
| Timeline |
| Delta Air Lines |
| Lindsell Train Investment |
Delta Air and Lindsell Train Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Lindsell Train
The main advantage of trading using opposite Delta Air and Lindsell Train positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Lindsell Train 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 Lindsell Train will offset losses from the drop in Lindsell Train's long position.| Delta Air vs. Samsung Electronics Co | Delta Air vs. Samsung Electronics Co | Delta Air vs. Hyundai Motor | Delta Air vs. Reliance Industries Ltd |
| Lindsell Train vs. LBG Media PLC | Lindsell Train vs. Liberty Media Corp | Lindsell Train vs. Schroders Investment Trusts | Lindsell Train vs. Livermore Investments Group |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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