Correlation Between Delta Air and ConocoPhillips
Can any of the company-specific risk be diversified away by investing in both Delta Air and ConocoPhillips 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 ConocoPhillips 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 ConocoPhillips, you can compare the effects of market volatilities on Delta Air and ConocoPhillips 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 ConocoPhillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and ConocoPhillips.
Diversification Opportunities for Delta Air and ConocoPhillips
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Delta and ConocoPhillips is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips 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 ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of Delta Air i.e., Delta Air and ConocoPhillips go up and down completely randomly.
Pair Corralation between Delta Air and ConocoPhillips
Assuming the 90 days trading horizon Delta Air Lines is expected to generate 1.21 times more return on investment than ConocoPhillips. However, Delta Air is 1.21 times more volatile than ConocoPhillips. It trades about 0.07 of its potential returns per unit of risk. ConocoPhillips is currently generating about 0.04 per unit of risk. If you would invest 80,998 in Delta Air Lines on September 12, 2024 and sell it today you would earn a total of 47,353 from holding Delta Air Lines or generate 58.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. ConocoPhillips
Performance |
| Timeline |
| Delta Air Lines |
| ConocoPhillips |
Delta Air and ConocoPhillips Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and ConocoPhillips
The main advantage of trading using opposite Delta Air and ConocoPhillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, ConocoPhillips 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 ConocoPhillips will offset losses from the drop in ConocoPhillips' long position.| Delta Air vs. Southwest Airlines | Delta Air vs. United Airlines Holdings | Delta Air vs. Controladora Vuela Compaa |
| ConocoPhillips vs. Delta Air Lines | ConocoPhillips vs. Verizon Communications | ConocoPhillips vs. The Bank of | ConocoPhillips vs. McEwen Mining |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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