Correlation Between Delta Air and Align Technology
Can any of the company-specific risk be diversified away by investing in both Delta Air and Align Technology 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 Align Technology 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 Align Technology, you can compare the effects of market volatilities on Delta Air and Align Technology 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 Align Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Align Technology.
Diversification Opportunities for Delta Air and Align Technology
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Delta and Align is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Align Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Align Technology 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 Align Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Align Technology has no effect on the direction of Delta Air i.e., Delta Air and Align Technology go up and down completely randomly.
Pair Corralation between Delta Air and Align Technology
Assuming the 90 days trading horizon Delta Air Lines is expected to generate 0.82 times more return on investment than Align Technology. However, Delta Air Lines is 1.22 times less risky than Align Technology. It trades about 0.08 of its potential returns per unit of risk. Align Technology is currently generating about 0.04 per unit of risk. If you would invest 18,727 in Delta Air Lines on August 30, 2024 and sell it today you would earn a total of 18,803 from holding Delta Air Lines or generate 100.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.8% |
| Values | Daily Returns |
Delta Air Lines vs. Align Technology
Performance |
| Timeline |
| Delta Air Lines |
| Align Technology |
Delta Air and Align Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Align Technology
The main advantage of trading using opposite Delta Air and Align Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Align Technology 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 Align Technology will offset losses from the drop in Align Technology's long position.The idea behind Delta Air Lines and Align Technology 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.| Align Technology vs. G2D Investments | Align Technology vs. UnitedHealth Group Incorporated | Align Technology vs. STMicroelectronics NV | Align Technology vs. MAHLE Metal Leve |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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