Correlation Between Delta Air and Target
Can any of the company-specific risk be diversified away by investing in both Delta Air and Target 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 Target 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 Target, you can compare the effects of market volatilities on Delta Air and Target 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 Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Target.
Diversification Opportunities for Delta Air and Target
Very good diversification
The 3 months correlation between Delta and Target is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target 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 Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Delta Air i.e., Delta Air and Target go up and down completely randomly.
Pair Corralation between Delta Air and Target
Assuming the 90 days trading horizon Delta Air Lines is expected to generate 0.83 times more return on investment than Target. However, Delta Air Lines is 1.21 times less risky than Target. It trades about 0.1 of its potential returns per unit of risk. Target is currently generating about 0.04 per unit of risk. If you would invest 68,128 in Delta Air Lines on September 4, 2024 and sell it today you would earn a total of 61,372 from holding Delta Air Lines or generate 90.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. Target
Performance |
| Timeline |
| Delta Air Lines |
| Target |
Delta Air and Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Target
The main advantage of trading using opposite Delta Air and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.| Delta Air vs. JetBlue Airways | Delta Air vs. Controladora Vuela Compaa | Delta Air vs. Grupo Aeromxico SAB |
| Target vs. Samsung Electronics Co | Target vs. New Oriental Education | Target vs. Cognizant Technology Solutions | Target 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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