Correlation Between Delta Air and Accenture Plc
Can any of the company-specific risk be diversified away by investing in both Delta Air and Accenture Plc 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 Accenture Plc 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 Accenture plc, you can compare the effects of market volatilities on Delta Air and Accenture Plc 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 Accenture Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Accenture Plc.
Diversification Opportunities for Delta Air and Accenture Plc
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Delta and Accenture is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Accenture plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accenture plc 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 Accenture Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accenture plc has no effect on the direction of Delta Air i.e., Delta Air and Accenture Plc go up and down completely randomly.
Pair Corralation between Delta Air and Accenture Plc
Assuming the 90 days trading horizon Delta Air Lines is expected to generate 1.99 times more return on investment than Accenture Plc. However, Delta Air is 1.99 times more volatile than Accenture plc. It trades about -0.09 of its potential returns per unit of risk. Accenture plc is currently generating about -0.21 per unit of risk. If you would invest 132,500 in Delta Air Lines on September 14, 2024 and sell it today you would lose (5,123) from holding Delta Air Lines or give up 3.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 76.19% |
| Values | Daily Returns |
Delta Air Lines vs. Accenture plc
Performance |
| Timeline |
| Delta Air Lines |
| Accenture plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Delta Air and Accenture Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Accenture Plc
The main advantage of trading using opposite Delta Air and Accenture Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Accenture Plc 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 Accenture Plc will offset losses from the drop in Accenture Plc's long position.| Delta Air vs. Southwest Airlines | Delta Air vs. United Airlines Holdings | Delta Air vs. Controladora Vuela Compaa |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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