Correlation Between Delta Air and Eaton Plc
Can any of the company-specific risk be diversified away by investing in both Delta Air and Eaton Plc 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 Eaton Plc 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 Eaton plc, you can compare the effects of market volatilities on Delta Air and Eaton Plc 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 Eaton Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Eaton Plc.
Diversification Opportunities for Delta Air and Eaton Plc
Almost no diversification
The 3 months correlation between Delta and Eaton is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Eaton plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton plc 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 Eaton Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton plc has no effect on the direction of Delta Air i.e., Delta Air and Eaton Plc go up and down completely randomly.
Pair Corralation between Delta Air and Eaton Plc
Assuming the 90 days trading horizon Delta Air is expected to generate 1.0 times less return on investment than Eaton Plc. In addition to that, Delta Air is 1.39 times more volatile than Eaton plc. It trades about 0.09 of its total potential returns per unit of risk. Eaton plc is currently generating about 0.13 per unit of volatility. If you would invest 5,593 in Eaton plc on September 12, 2024 and sell it today you would earn a total of 9,863 from holding Eaton plc or generate 176.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 85.11% |
| Values | Daily Returns |
Delta Air Lines vs. Eaton plc
Performance |
| Timeline |
| Delta Air Lines |
| Eaton plc |
Delta Air and Eaton Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Eaton Plc
The main advantage of trading using opposite Delta Air and Eaton Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Eaton Plc 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 Eaton Plc will offset losses from the drop in Eaton Plc's long position.| Delta Air vs. Paycom Software | Delta Air vs. BIONTECH SE DRN | Delta Air vs. Spotify Technology SA | Delta Air vs. salesforce inc |
| Eaton Plc vs. Align Technology | Eaton Plc vs. Delta Air Lines | Eaton Plc vs. Marvell Technology | Eaton Plc vs. Telecomunicaes Brasileiras SA |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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