Correlation Between Delta Air and AbbVie
Can any of the company-specific risk be diversified away by investing in both Delta Air and AbbVie 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 AbbVie 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 AbbVie Inc, you can compare the effects of market volatilities on Delta Air and AbbVie 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 AbbVie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and AbbVie.
Diversification Opportunities for Delta Air and AbbVie
Good diversification
The 3 months correlation between Delta and AbbVie is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and AbbVie Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbbVie Inc 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 AbbVie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbbVie Inc has no effect on the direction of Delta Air i.e., Delta Air and AbbVie go up and down completely randomly.
Pair Corralation between Delta Air and AbbVie
Assuming the 90 days trading horizon Delta Air Lines is expected to generate 1.29 times more return on investment than AbbVie. However, Delta Air is 1.29 times more volatile than AbbVie Inc. It trades about 0.07 of its potential returns per unit of risk. AbbVie Inc is currently generating about 0.05 per unit of risk. If you would invest 19,557 in Delta Air Lines on October 9, 2024 and sell it today you would earn a total of 17,107 from holding Delta Air Lines or generate 87.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.85% |
| Values | Daily Returns |
Delta Air Lines vs. AbbVie Inc
Performance |
| Timeline |
| Delta Air Lines |
| AbbVie Inc |
Delta Air and AbbVie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and AbbVie
The main advantage of trading using opposite Delta Air and AbbVie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, AbbVie 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 AbbVie will offset losses from the drop in AbbVie's long position.| Delta Air vs. Monster Beverage | Delta Air vs. Unifique Telecomunicaes SA | Delta Air vs. Charter Communications | Delta Air vs. United Natural Foods, |
| AbbVie vs. Verizon Communications | AbbVie vs. Sumitomo Mitsui Financial | AbbVie vs. Prudential Financial | AbbVie vs. Truist Financial |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |