Correlation Between Delta Air and Sumitomo Electric
Can any of the company-specific risk be diversified away by investing in both Delta Air and Sumitomo Electric 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 Sumitomo Electric 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 Sumitomo Electric Industries, you can compare the effects of market volatilities on Delta Air and Sumitomo Electric 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 Sumitomo Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Sumitomo Electric.
Diversification Opportunities for Delta Air and Sumitomo Electric
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Delta and Sumitomo is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Sumitomo Electric Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Electric 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 Sumitomo Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Electric has no effect on the direction of Delta Air i.e., Delta Air and Sumitomo Electric go up and down completely randomly.
Pair Corralation between Delta Air and Sumitomo Electric
If you would invest 6,356 in Delta Air Lines on September 12, 2024 and sell it today you would lose (8.00) from holding Delta Air Lines or give up 0.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. Sumitomo Electric Industries
Performance |
| Timeline |
| Delta Air Lines |
| Sumitomo Electric |
Delta Air and Sumitomo Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Sumitomo Electric
The main advantage of trading using opposite Delta Air and Sumitomo Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Sumitomo Electric 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 Sumitomo Electric will offset losses from the drop in Sumitomo Electric's long position.| Delta Air vs. Volaris | Delta Air vs. flyExclusive, | Delta Air vs. Alaska Air Group | Delta Air vs. Copa Holdings SA |
| Sumitomo Electric vs. Air Transport Services | Sumitomo Electric vs. Delta Air Lines | Sumitomo Electric vs. Allegiant Travel | Sumitomo Electric vs. Kite Realty Group |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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