Correlation Between Delta Air and Eisai
Can any of the company-specific risk be diversified away by investing in both Delta Air and Eisai 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 Eisai 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 Eisai Co, you can compare the effects of market volatilities on Delta Air and Eisai 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 Eisai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Eisai.
Diversification Opportunities for Delta Air and Eisai
Pay attention - limited upside
The 3 months correlation between Delta and Eisai is -0.96. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Eisai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eisai 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 Eisai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eisai has no effect on the direction of Delta Air i.e., Delta Air and Eisai go up and down completely randomly.
Pair Corralation between Delta Air and Eisai
Considering the 90-day investment horizon Delta Air Lines is expected to generate 1.03 times more return on investment than Eisai. However, Delta Air is 1.03 times more volatile than Eisai Co. It trades about 0.11 of its potential returns per unit of risk. Eisai Co is currently generating about -0.1 per unit of risk. If you would invest 3,980 in Delta Air Lines on August 25, 2024 and sell it today you would earn a total of 2,354 from holding Delta Air Lines or generate 59.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. Eisai Co
Performance |
| Timeline |
| Delta Air Lines |
| Eisai |
Delta Air and Eisai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Eisai
The main advantage of trading using opposite Delta Air and Eisai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Eisai 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 Eisai will offset losses from the drop in Eisai's long position.The idea behind Delta Air Lines and Eisai Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Eisai vs. Copa Holdings SA | Eisai vs. United Airlines Holdings | Eisai vs. Delta Air Lines | Eisai vs. SkyWest |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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