Correlation Between Delta Air and Deutsche Lufthansa
Can any of the company-specific risk be diversified away by investing in both Delta Air and Deutsche Lufthansa 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 Deutsche Lufthansa 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 Deutsche Lufthansa AG, you can compare the effects of market volatilities on Delta Air and Deutsche Lufthansa 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 Deutsche Lufthansa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Deutsche Lufthansa.
Diversification Opportunities for Delta Air and Deutsche Lufthansa
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Delta and Deutsche is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Deutsche Lufthansa AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Lufthansa 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 Deutsche Lufthansa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Lufthansa has no effect on the direction of Delta Air i.e., Delta Air and Deutsche Lufthansa go up and down completely randomly.
Pair Corralation between Delta Air and Deutsche Lufthansa
Considering the 90-day investment horizon Delta Air Lines is expected to generate 0.57 times more return on investment than Deutsche Lufthansa. However, Delta Air Lines is 1.75 times less risky than Deutsche Lufthansa. It trades about 0.07 of its potential returns per unit of risk. Deutsche Lufthansa AG is currently generating about -0.01 per unit of risk. If you would invest 3,800 in Delta Air Lines on November 2, 2024 and sell it today you would earn a total of 3,053 from holding Delta Air Lines or generate 80.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 81.95% |
| Values | Daily Returns |
Delta Air Lines vs. Deutsche Lufthansa AG
Performance |
| Timeline |
| Delta Air Lines |
| Deutsche Lufthansa |
Delta Air and Deutsche Lufthansa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Deutsche Lufthansa
The main advantage of trading using opposite Delta Air and Deutsche Lufthansa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Deutsche Lufthansa 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 Deutsche Lufthansa will offset losses from the drop in Deutsche Lufthansa's 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 |
| Deutsche Lufthansa vs. Finnair Oyj | Deutsche Lufthansa vs. easyJet plc | Deutsche Lufthansa vs. Norse Atlantic ASA | Deutsche Lufthansa vs. Air New Zealand |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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