Correlation Between Delta Air and Japan Tobacco
Can any of the company-specific risk be diversified away by investing in both Delta Air and Japan Tobacco 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 Japan Tobacco 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 Japan Tobacco ADR, you can compare the effects of market volatilities on Delta Air and Japan Tobacco 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 Japan Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Japan Tobacco.
Diversification Opportunities for Delta Air and Japan Tobacco
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Delta and Japan is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Japan Tobacco ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Tobacco ADR 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 Japan Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Tobacco ADR has no effect on the direction of Delta Air i.e., Delta Air and Japan Tobacco go up and down completely randomly.
Pair Corralation between Delta Air and Japan Tobacco
Considering the 90-day investment horizon Delta Air Lines is expected to generate 2.47 times more return on investment than Japan Tobacco. However, Delta Air is 2.47 times more volatile than Japan Tobacco ADR. It trades about 0.27 of its potential returns per unit of risk. Japan Tobacco ADR is currently generating about -0.04 per unit of risk. If you would invest 5,907 in Delta Air Lines on November 3, 2024 and sell it today you would earn a total of 820.00 from holding Delta Air Lines or generate 13.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. Japan Tobacco ADR
Performance |
| Timeline |
| Delta Air Lines |
| Japan Tobacco ADR |
Delta Air and Japan Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Japan Tobacco
The main advantage of trading using opposite Delta Air and Japan Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Japan Tobacco 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 Japan Tobacco will offset losses from the drop in Japan Tobacco'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 |
| Japan Tobacco vs. British American Tobacco | Japan Tobacco vs. Imperial Brands PLC | Japan Tobacco vs. RLX Technology | Japan Tobacco vs. British American Tobacco |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |