Correlation Between Delta Air and Barclays PLC
Can any of the company-specific risk be diversified away by investing in both Delta Air and Barclays 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 Barclays 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 Barclays PLC, you can compare the effects of market volatilities on Delta Air and Barclays 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 Barclays PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Barclays PLC.
Diversification Opportunities for Delta Air and Barclays PLC
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Delta and Barclays is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Barclays PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays 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 Barclays PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays PLC has no effect on the direction of Delta Air i.e., Delta Air and Barclays PLC go up and down completely randomly.
Pair Corralation between Delta Air and Barclays PLC
Assuming the 90 days trading horizon Delta Air is expected to generate 1.1 times less return on investment than Barclays PLC. But when comparing it to its historical volatility, Delta Air Lines is 1.11 times less risky than Barclays PLC. It trades about 0.15 of its potential returns per unit of risk. Barclays PLC is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 13,014 in Barclays PLC on November 9, 2024 and sell it today you would earn a total of 17,486 from holding Barclays PLC or generate 134.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. Barclays PLC
Performance |
| Timeline |
| Delta Air Lines |
| Barclays PLC |
Delta Air and Barclays PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Barclays PLC
The main advantage of trading using opposite Delta Air and Barclays PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Barclays 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 Barclays PLC will offset losses from the drop in Barclays PLC's long position.| Delta Air vs. Air Transport Services | Delta Air vs. FibraHotel | Delta Air vs. Capital One Financial | Delta Air vs. Ameriprise Financial |
| Barclays PLC vs. Deutsche Bank Aktiengesellschaft | Barclays PLC vs. Genworth Financial | Barclays PLC vs. McEwen Mining | Barclays PLC vs. Prudential 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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