Correlation Between ConocoPhillips and Delta Air
Can any of the company-specific risk be diversified away by investing in both ConocoPhillips 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 ConocoPhillips and Delta Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConocoPhillips and Delta Air Lines, you can compare the effects of market volatilities on ConocoPhillips 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 ConocoPhillips with a short position of Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConocoPhillips and Delta Air.
Diversification Opportunities for ConocoPhillips and Delta Air
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ConocoPhillips and Delta is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding ConocoPhillips 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 ConocoPhillips 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 ConocoPhillips 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 ConocoPhillips i.e., ConocoPhillips and Delta Air go up and down completely randomly.
Pair Corralation between ConocoPhillips and Delta Air
Assuming the 90 days trading horizon ConocoPhillips is expected to under-perform the Delta Air. In addition to that, ConocoPhillips is 1.22 times more volatile than Delta Air Lines. It trades about -0.12 of its total potential returns per unit of risk. Delta Air Lines is currently generating about -0.07 per unit of volatility. If you would invest 131,750 in Delta Air Lines on September 13, 2024 and sell it today you would lose (4,373) from holding Delta Air Lines or give up 3.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ConocoPhillips vs. Delta Air Lines
Performance |
| Timeline |
| ConocoPhillips |
| Delta Air Lines |
ConocoPhillips and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ConocoPhillips and Delta Air
The main advantage of trading using opposite ConocoPhillips and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConocoPhillips 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 ConocoPhillips 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. Southwest Airlines | Delta Air vs. United Airlines Holdings | Delta Air vs. Controladora Vuela Compaa |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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