Correlation Between Delta Air and Deluxe
Can any of the company-specific risk be diversified away by investing in both Delta Air and Deluxe 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 Deluxe 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 Deluxe, you can compare the effects of market volatilities on Delta Air and Deluxe 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 Deluxe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Deluxe.
Diversification Opportunities for Delta Air and Deluxe
Very poor diversification
The 3 months correlation between Delta and Deluxe is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Deluxe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deluxe 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 Deluxe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deluxe has no effect on the direction of Delta Air i.e., Delta Air and Deluxe go up and down completely randomly.
Pair Corralation between Delta Air and Deluxe
Considering the 90-day investment horizon Delta Air Lines is expected to generate 0.86 times more return on investment than Deluxe. However, Delta Air Lines is 1.16 times less risky than Deluxe. It trades about 0.07 of its potential returns per unit of risk. Deluxe is currently generating about 0.03 per unit of risk. If you would invest 3,781 in Delta Air Lines on October 21, 2024 and sell it today you would earn a total of 2,801 from holding Delta Air Lines or generate 74.08% 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. Deluxe
Performance |
| Timeline |
| Delta Air Lines |
| Deluxe |
Delta Air and Deluxe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Deluxe
The main advantage of trading using opposite Delta Air and Deluxe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Deluxe 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 Deluxe will offset losses from the drop in Deluxe'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 |
| Deluxe vs. Criteo Sa | Deluxe vs. Emerald Expositions Events | Deluxe vs. Marchex | Deluxe vs. Integral Ad Science |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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