Correlation Between Credit Acceptance and Delta Air
Can any of the company-specific risk be diversified away by investing in both Credit Acceptance 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 Credit Acceptance and Delta Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credit Acceptance and Delta Air Lines, you can compare the effects of market volatilities on Credit Acceptance 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 Credit Acceptance with a short position of Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Acceptance and Delta Air.
Diversification Opportunities for Credit Acceptance and Delta Air
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Credit and Delta is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Credit Acceptance 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 Credit Acceptance 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 Credit Acceptance 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 Credit Acceptance i.e., Credit Acceptance and Delta Air go up and down completely randomly.
Pair Corralation between Credit Acceptance and Delta Air
Assuming the 90 days trading horizon Credit Acceptance is expected to generate 2.78 times less return on investment than Delta Air. But when comparing it to its historical volatility, Credit Acceptance is 1.93 times less risky than Delta Air. It trades about 0.09 of its potential returns per unit of risk. Delta Air Lines is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 25,932 in Delta Air Lines on August 26, 2024 and sell it today you would earn a total of 10,772 from holding Delta Air Lines or generate 41.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Credit Acceptance vs. Delta Air Lines
Performance |
| Timeline |
| Credit Acceptance |
| Delta Air Lines |
Credit Acceptance and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credit Acceptance and Delta Air
The main advantage of trading using opposite Credit Acceptance and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Acceptance 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.| Credit Acceptance vs. Tyson Foods | Credit Acceptance vs. Brpr Corporate Offices | Credit Acceptance vs. Take Two Interactive Software | Credit Acceptance vs. TAL Education Group |
| Delta Air vs. Healthpeak Properties | Delta Air vs. Zoom Video Communications | Delta Air vs. Verizon Communications | Delta Air vs. Electronic Arts |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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