Correlation Between Delta Air and BEST
Can any of the company-specific risk be diversified away by investing in both Delta Air and BEST 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 BEST 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 BEST Inc, you can compare the effects of market volatilities on Delta Air and BEST 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 BEST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and BEST.
Diversification Opportunities for Delta Air and BEST
Pay attention - limited upside
The 3 months correlation between Delta and BEST is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and BEST Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEST Inc 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 BEST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEST Inc has no effect on the direction of Delta Air i.e., Delta Air and BEST go up and down completely randomly.
Pair Corralation between Delta Air and BEST
Considering the 90-day investment horizon Delta Air Lines is expected to generate 0.57 times more return on investment than BEST. However, Delta Air Lines is 1.75 times less risky than BEST. It trades about 0.07 of its potential returns per unit of risk. BEST Inc is currently generating about 0.01 per unit of risk. If you would invest 3,524 in Delta Air Lines on August 24, 2024 and sell it today you would earn a total of 2,810 from holding Delta Air Lines or generate 79.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Delta Air Lines vs. BEST Inc
Performance |
| Timeline |
| Delta Air Lines |
| BEST Inc |
Delta Air and BEST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and BEST
The main advantage of trading using opposite Delta Air and BEST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, BEST 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 BEST will offset losses from the drop in BEST'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 |
| BEST vs. Heartland Express | BEST vs. Universal Logistics Holdings | BEST vs. Marten Transport | BEST vs. Werner Enterprises |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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