Correlation Between Delta Air and Axalta Coating
Can any of the company-specific risk be diversified away by investing in both Delta Air and Axalta Coating 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 Axalta Coating 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 Axalta Coating Systems, you can compare the effects of market volatilities on Delta Air and Axalta Coating 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 Axalta Coating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Axalta Coating.
Diversification Opportunities for Delta Air and Axalta Coating
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Delta and Axalta is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Axalta Coating Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axalta Coating Systems 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 Axalta Coating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axalta Coating Systems has no effect on the direction of Delta Air i.e., Delta Air and Axalta Coating go up and down completely randomly.
Pair Corralation between Delta Air and Axalta Coating
Considering the 90-day investment horizon Delta Air Lines is expected to generate 1.18 times more return on investment than Axalta Coating. However, Delta Air is 1.18 times more volatile than Axalta Coating Systems. It trades about 0.08 of its potential returns per unit of risk. Axalta Coating Systems is currently generating about 0.06 per unit of risk. If you would invest 3,380 in Delta Air Lines on August 28, 2024 and sell it today you would earn a total of 3,069 from holding Delta Air Lines or generate 90.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. Axalta Coating Systems
Performance |
| Timeline |
| Delta Air Lines |
| Axalta Coating Systems |
Delta Air and Axalta Coating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Axalta Coating
The main advantage of trading using opposite Delta Air and Axalta Coating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Axalta Coating 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 Axalta Coating will offset losses from the drop in Axalta Coating'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 |
| Axalta Coating vs. Avient Corp | Axalta Coating vs. H B Fuller | Axalta Coating vs. Quaker Chemical | Axalta Coating vs. Cabot |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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