Correlation Between Delta Air and Take Two
Can any of the company-specific risk be diversified away by investing in both Delta Air and Take Two 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 Take Two 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 Take Two Interactive Software, you can compare the effects of market volatilities on Delta Air and Take Two 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 Take Two. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Take Two.
Diversification Opportunities for Delta Air and Take Two
Poor diversification
The 3 months correlation between Delta and Take is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Take Two Interactive Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Take Two Interactive 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 Take Two. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Take Two Interactive has no effect on the direction of Delta Air i.e., Delta Air and Take Two go up and down completely randomly.
Pair Corralation between Delta Air and Take Two
Assuming the 90 days trading horizon Delta Air Lines is expected to generate 1.58 times more return on investment than Take Two. However, Delta Air is 1.58 times more volatile than Take Two Interactive Software. It trades about 0.29 of its potential returns per unit of risk. Take Two Interactive Software is currently generating about 0.45 per unit of risk. If you would invest 31,093 in Delta Air Lines on August 24, 2024 and sell it today you would earn a total of 5,876 from holding Delta Air Lines or generate 18.9% 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. Take Two Interactive Software
Performance |
| Timeline |
| Delta Air Lines |
| Take Two Interactive |
Delta Air and Take Two Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Take Two
The main advantage of trading using opposite Delta Air and Take Two positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Take Two 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 Take Two will offset losses from the drop in Take Two's long position.| Delta Air vs. Southwest Airlines Co | Delta Air vs. United Airlines Holdings | Delta Air vs. American Airlines Group | Delta Air vs. Gol Linhas Areas |
| Take Two vs. Zoom Video Communications | Take Two vs. Verizon Communications | Take Two vs. Bemobi Mobile Tech | Take Two vs. Dell Technologies |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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