Correlation Between Delta Air and Leidos Holdings
Can any of the company-specific risk be diversified away by investing in both Delta Air and Leidos Holdings 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 Leidos Holdings 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 Leidos Holdings, you can compare the effects of market volatilities on Delta Air and Leidos Holdings 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 Leidos Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Leidos Holdings.
Diversification Opportunities for Delta Air and Leidos Holdings
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Delta and Leidos is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Leidos Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leidos Holdings 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 Leidos Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leidos Holdings has no effect on the direction of Delta Air i.e., Delta Air and Leidos Holdings go up and down completely randomly.
Pair Corralation between Delta Air and Leidos Holdings
Assuming the 90 days trading horizon Delta Air Lines is expected to generate 0.66 times more return on investment than Leidos Holdings. However, Delta Air Lines is 1.51 times less risky than Leidos Holdings. It trades about 0.16 of its potential returns per unit of risk. Leidos Holdings is currently generating about -0.18 per unit of risk. If you would invest 34,918 in Delta Air Lines on September 12, 2024 and sell it today you would earn a total of 2,866 from holding Delta Air Lines or generate 8.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. Leidos Holdings
Performance |
| Timeline |
| Delta Air Lines |
| Leidos Holdings |
Delta Air and Leidos Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Leidos Holdings
The main advantage of trading using opposite Delta Air and Leidos Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Leidos Holdings 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 Leidos Holdings will offset losses from the drop in Leidos Holdings' long position.| Delta Air vs. Paycom Software | Delta Air vs. BIONTECH SE DRN | Delta Air vs. Spotify Technology SA | Delta Air vs. salesforce inc |
| Leidos Holdings vs. Unity Software | Leidos Holdings vs. Take Two Interactive Software | Leidos Holdings vs. Uber Technologies | Leidos Holdings vs. Cognizant Technology Solutions |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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