Correlation Between Delta Air and Digi International
Can any of the company-specific risk be diversified away by investing in both Delta Air and Digi International 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 Digi International 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 Digi International, you can compare the effects of market volatilities on Delta Air and Digi International 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 Digi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Digi International.
Diversification Opportunities for Delta Air and Digi International
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Delta and Digi is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International 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 Digi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digi International has no effect on the direction of Delta Air i.e., Delta Air and Digi International go up and down completely randomly.
Pair Corralation between Delta Air and Digi International
Considering the 90-day investment horizon Delta Air Lines is expected to generate 0.71 times more return on investment than Digi International. However, Delta Air Lines is 1.4 times less risky than Digi International. It trades about 0.08 of its potential returns per unit of risk. Digi International is currently generating about 0.0 per unit of risk. If you would invest 3,850 in Delta Air Lines on August 31, 2024 and sell it today you would earn a total of 2,532 from holding Delta Air Lines or generate 65.77% 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. Digi International
Performance |
| Timeline |
| Delta Air Lines |
| Digi International |
Delta Air and Digi International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Digi International
The main advantage of trading using opposite Delta Air and Digi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Digi International 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 Digi International will offset losses from the drop in Digi International's long position.| Delta Air vs. JetBlue Airways Corp | Delta Air vs. Allegiant Travel | Delta Air vs. SkyWest | Delta Air vs. Air Transport Services |
| Digi International vs. Extreme Networks | Digi International vs. Ciena Corp | Digi International vs. Harmonic | Digi International vs. Comtech Telecommunications 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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