Correlation Between Delta Air and BASF SE
Can any of the company-specific risk be diversified away by investing in both Delta Air and BASF SE 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 BASF SE 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 BASF SE, you can compare the effects of market volatilities on Delta Air and BASF SE 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 BASF SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and BASF SE.
Diversification Opportunities for Delta Air and BASF SE
Pay attention - limited upside
The 3 months correlation between Delta and BASF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and BASF SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE 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 BASF SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASF SE has no effect on the direction of Delta Air i.e., Delta Air and BASF SE go up and down completely randomly.
Pair Corralation between Delta Air and BASF SE
Assuming the 90 days trading horizon Delta Air Lines is expected to generate 3.34 times more return on investment than BASF SE. However, Delta Air is 3.34 times more volatile than BASF SE. It trades about 0.1 of its potential returns per unit of risk. BASF SE is currently generating about 0.02 per unit of risk. If you would invest 68,128 in Delta Air Lines on September 2, 2024 and sell it today you would earn a total of 62,372 from holding Delta Air Lines or generate 91.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. BASF SE
Performance |
| Timeline |
| Delta Air Lines |
| BASF SE |
Delta Air and BASF SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and BASF SE
The main advantage of trading using opposite Delta Air and BASF SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, BASF SE 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 BASF SE will offset losses from the drop in BASF SE's long position.| Delta Air vs. KB Home | Delta Air vs. Taiwan Semiconductor Manufacturing | Delta Air vs. Ameriprise Financial | Delta Air vs. Grupo Sports World |
| BASF SE vs. Costco Wholesale | BASF SE vs. United States Steel | BASF SE vs. GMxico Transportes SAB | BASF SE vs. Genworth Financial |
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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