Correlation Between Delta Air and Trade Desk
Can any of the company-specific risk be diversified away by investing in both Delta Air and Trade Desk 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 Trade Desk 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 The Trade Desk, you can compare the effects of market volatilities on Delta Air and Trade Desk 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 Trade Desk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Trade Desk.
Diversification Opportunities for Delta Air and Trade Desk
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Delta and Trade is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and The Trade Desk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Desk 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 Trade Desk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Desk has no effect on the direction of Delta Air i.e., Delta Air and Trade Desk go up and down completely randomly.
Pair Corralation between Delta Air and Trade Desk
Assuming the 90 days trading horizon Delta Air is expected to generate 1.6 times less return on investment than Trade Desk. But when comparing it to its historical volatility, Delta Air Lines is 1.76 times less risky than Trade Desk. It trades about 0.08 of its potential returns per unit of risk. The Trade Desk is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 251.00 in The Trade Desk on August 30, 2024 and sell it today you would earn a total of 511.00 from holding The Trade Desk or generate 203.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 84.77% |
| Values | Daily Returns |
Delta Air Lines vs. The Trade Desk
Performance |
| Timeline |
| Delta Air Lines |
| Trade Desk |
Delta Air and Trade Desk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Trade Desk
The main advantage of trading using opposite Delta Air and Trade Desk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Trade Desk 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 Trade Desk will offset losses from the drop in Trade Desk's long position.The idea behind Delta Air Lines and The Trade Desk pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Trade Desk vs. Raytheon Technologies | Trade Desk vs. Dell Technologies | Trade Desk vs. STMicroelectronics NV | Trade Desk vs. Lupatech 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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