Correlation Between Delta Air and Air Products
Can any of the company-specific risk be diversified away by investing in both Delta Air and Air Products 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 Air Products 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 Air Products and, you can compare the effects of market volatilities on Delta Air and Air Products 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 Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Air Products.
Diversification Opportunities for Delta Air and Air Products
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Delta and Air is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products 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 Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products has no effect on the direction of Delta Air i.e., Delta Air and Air Products go up and down completely randomly.
Pair Corralation between Delta Air and Air Products
Considering the 90-day investment horizon Delta Air Lines is expected to under-perform the Air Products. In addition to that, Delta Air is 1.22 times more volatile than Air Products and. It trades about -0.01 of its total potential returns per unit of risk. Air Products and is currently generating about -0.01 per unit of volatility. If you would invest 31,780 in Air Products and on November 18, 2024 and sell it today you would lose (168.00) from holding Air Products and or give up 0.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. Air Products and
Performance |
| Timeline |
| Delta Air Lines |
| Air Products |
Delta Air and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Air Products
The main advantage of trading using opposite Delta Air and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| Delta Air vs. American Airlines Group | Delta Air vs. Southwest Airlines | Delta Air vs. JetBlue Airways Corp | Delta Air vs. United Airlines Holdings |
| Air Products vs. PPG Industries | Air Products vs. Sherwin Williams Co | Air Products vs. Ecolab Inc | Air Products vs. Albemarle Corp |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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