Correlation Between APPLIED MATERIALS and DELTA AIR
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and DELTA AIR 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 APPLIED MATERIALS and DELTA AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and DELTA AIR LINES, you can compare the effects of market volatilities on APPLIED MATERIALS and DELTA AIR 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 APPLIED MATERIALS with a short position of DELTA AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and DELTA AIR.
Diversification Opportunities for APPLIED MATERIALS and DELTA AIR
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between APPLIED and DELTA is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and DELTA AIR LINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DELTA AIR LINES and APPLIED MATERIALS 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 APPLIED MATERIALS are associated (or correlated) with DELTA AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DELTA AIR LINES has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and DELTA AIR go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and DELTA AIR
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 1.12 times less return on investment than DELTA AIR. In addition to that, APPLIED MATERIALS is 1.17 times more volatile than DELTA AIR LINES. It trades about 0.05 of its total potential returns per unit of risk. DELTA AIR LINES is currently generating about 0.06 per unit of volatility. If you would invest 3,648 in DELTA AIR LINES on September 29, 2024 and sell it today you would earn a total of 2,322 from holding DELTA AIR LINES or generate 63.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
APPLIED MATERIALS vs. DELTA AIR LINES
Performance |
| Timeline |
| APPLIED MATERIALS |
| DELTA AIR LINES |
APPLIED MATERIALS and DELTA AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and DELTA AIR
The main advantage of trading using opposite APPLIED MATERIALS and DELTA AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, DELTA AIR 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 DELTA AIR will offset losses from the drop in DELTA AIR's long position.The idea behind APPLIED MATERIALS and DELTA AIR LINES pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| DELTA AIR vs. Virtus Investment Partners | DELTA AIR vs. Japan Asia Investment | DELTA AIR vs. APPLIED MATERIALS | DELTA AIR vs. Materialise NV |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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