Correlation Between Delta Air and Aspen Digital
Can any of the company-specific risk be diversified away by investing in both Delta Air and Aspen Digital 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 Aspen Digital 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 Aspen Digital, you can compare the effects of market volatilities on Delta Air and Aspen Digital 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 Aspen Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Aspen Digital.
Diversification Opportunities for Delta Air and Aspen Digital
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Delta and Aspen is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Aspen Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Digital 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 Aspen Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Digital has no effect on the direction of Delta Air i.e., Delta Air and Aspen Digital go up and down completely randomly.
Pair Corralation between Delta Air and Aspen Digital
Considering the 90-day investment horizon Delta Air Lines is expected to generate 5.25 times more return on investment than Aspen Digital. However, Delta Air is 5.25 times more volatile than Aspen Digital. It trades about 0.31 of its potential returns per unit of risk. Aspen Digital is currently generating about 0.06 per unit of risk. If you would invest 5,538 in Delta Air Lines on August 28, 2024 and sell it today you would earn a total of 911.00 from holding Delta Air Lines or generate 16.45% 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. Aspen Digital
Performance |
| Timeline |
| Delta Air Lines |
| Aspen Digital |
Delta Air and Aspen Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Aspen Digital
The main advantage of trading using opposite Delta Air and Aspen Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Aspen Digital 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 Aspen Digital will offset losses from the drop in Aspen Digital's long position.| Delta Air vs. American Airlines Group | Delta Air vs. Southwest Airlines | Delta Air vs. JetBlue Airways Corp | Delta Air vs. Spirit Airlines |
| Aspen Digital vs. Copa Holdings SA | Aspen Digital vs. United Airlines Holdings | Aspen Digital vs. Delta Air Lines | Aspen Digital vs. SkyWest |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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