Correlation Between Delta Air and United Rentals
Can any of the company-specific risk be diversified away by investing in both Delta Air and United Rentals 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 United Rentals 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 United Rentals, you can compare the effects of market volatilities on Delta Air and United Rentals 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 United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and United Rentals.
Diversification Opportunities for Delta Air and United Rentals
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Delta and United is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals 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 United Rentals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Rentals has no effect on the direction of Delta Air i.e., Delta Air and United Rentals go up and down completely randomly.
Pair Corralation between Delta Air and United Rentals
Assuming the 90 days trading horizon Delta Air Lines is expected to generate 0.86 times more return on investment than United Rentals. However, Delta Air Lines is 1.16 times less risky than United Rentals. It trades about 0.16 of its potential returns per unit of risk. United Rentals is currently generating about 0.14 per unit of risk. If you would invest 15,644 in Delta Air Lines on August 25, 2024 and sell it today you would earn a total of 21,060 from holding Delta Air Lines or generate 134.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 91.48% |
| Values | Daily Returns |
Delta Air Lines vs. United Rentals
Performance |
| Timeline |
| Delta Air Lines |
| United Rentals |
Delta Air and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and United Rentals
The main advantage of trading using opposite Delta Air and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, United Rentals 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 United Rentals will offset losses from the drop in United Rentals' long position.| Delta Air vs. Charter Communications | Delta Air vs. Raytheon Technologies | Delta Air vs. Unity Software | Delta Air vs. Waste Management |
| United Rentals vs. Localiza Rent a | United Rentals vs. Movida Participaes SA | United Rentals vs. Fras le SA | United Rentals vs. Clave Indices De |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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