Correlation Between Delta Air and Micron Technology
Can any of the company-specific risk be diversified away by investing in both Delta Air and Micron Technology 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 Micron Technology 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 Micron Technology, you can compare the effects of market volatilities on Delta Air and Micron Technology 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 Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Micron Technology.
Diversification Opportunities for Delta Air and Micron Technology
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Delta and Micron is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology 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 Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of Delta Air i.e., Delta Air and Micron Technology go up and down completely randomly.
Pair Corralation between Delta Air and Micron Technology
Assuming the 90 days trading horizon Delta Air is expected to generate 1.89 times less return on investment than Micron Technology. But when comparing it to its historical volatility, Delta Air Lines is 1.11 times less risky than Micron Technology. It trades about 0.22 of its potential returns per unit of risk. Micron Technology is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 175,683 in Micron Technology on October 20, 2024 and sell it today you would earn a total of 43,572 from holding Micron Technology or generate 24.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Delta Air Lines vs. Micron Technology
Performance |
| Timeline |
| Delta Air Lines |
| Micron Technology |
Delta Air and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Micron Technology
The main advantage of trading using opposite Delta Air and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Micron Technology 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 Micron Technology will offset losses from the drop in Micron Technology's long position.| Delta Air vs. Grupo Hotelero Santa | Delta Air vs. Capital One Financial | Delta Air vs. McEwen Mining | Delta Air vs. Ameriprise Financial |
| Micron Technology vs. Cognizant Technology Solutions | Micron Technology vs. Grupo Hotelero Santa | Micron Technology vs. McEwen Mining | Micron Technology vs. Verizon Communications |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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