Correlation Between Delta Air and DXC Technology
Can any of the company-specific risk be diversified away by investing in both Delta Air and DXC 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 DXC 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 DXC Technology, you can compare the effects of market volatilities on Delta Air and DXC 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 DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and DXC Technology.
Diversification Opportunities for Delta Air and DXC Technology
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Delta and DXC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and DXC Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC 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 DXC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXC Technology has no effect on the direction of Delta Air i.e., Delta Air and DXC Technology go up and down completely randomly.
Pair Corralation between Delta Air and DXC Technology
Assuming the 90 days trading horizon Delta Air Lines is expected to generate 0.92 times more return on investment than DXC Technology. However, Delta Air Lines is 1.09 times less risky than DXC Technology. It trades about 0.16 of its potential returns per unit of risk. DXC Technology is currently generating about 0.06 per unit of risk. If you would invest 18,710 in Delta Air Lines on October 14, 2024 and sell it today you would earn a total of 22,128 from holding Delta Air Lines or generate 118.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.57% |
| Values | Daily Returns |
Delta Air Lines vs. DXC Technology
Performance |
| Timeline |
| Delta Air Lines |
| DXC Technology |
Delta Air and DXC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and DXC Technology
The main advantage of trading using opposite Delta Air and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, DXC 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 DXC Technology will offset losses from the drop in DXC Technology's long position.| Delta Air vs. Applied Materials, | Delta Air vs. Vulcan Materials | Delta Air vs. Molson Coors Beverage | Delta Air vs. Verizon Communications |
| DXC Technology vs. HCA Healthcare, | DXC Technology vs. GP Investments | DXC Technology vs. Fresenius Medical Care | DXC Technology vs. Universal Health Services, |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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