Correlation Between Digi International and Delta Air
Can any of the company-specific risk be diversified away by investing in both Digi International and Delta Air 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 Digi International and Delta Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digi International and Delta Air Lines, you can compare the effects of market volatilities on Digi International and Delta Air 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 Digi International with a short position of Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digi International and Delta Air.
Diversification Opportunities for Digi International and Delta Air
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Digi and Delta is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Digi International and Delta Air Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Air Lines and Digi International 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 Digi International are associated (or correlated) with Delta Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Air Lines has no effect on the direction of Digi International i.e., Digi International and Delta Air go up and down completely randomly.
Pair Corralation between Digi International and Delta Air
Given the investment horizon of 90 days Digi International is expected to generate 20.89 times less return on investment than Delta Air. In addition to that, Digi International is 1.4 times more volatile than Delta Air Lines. It trades about 0.0 of its total potential returns per unit of risk. Delta Air Lines is currently generating about 0.08 per unit of volatility. If you would invest 3,850 in Delta Air Lines on August 31, 2024 and sell it today you would earn a total of 2,532 from holding Delta Air Lines or generate 65.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digi International vs. Delta Air Lines
Performance |
| Timeline |
| Digi International |
| Delta Air Lines |
Digi International and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digi International and Delta Air
The main advantage of trading using opposite Digi International and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digi International position performs unexpectedly, Delta Air 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 Delta Air will offset losses from the drop in Delta Air's long position.| Digi International vs. Extreme Networks | Digi International vs. Ciena Corp | Digi International vs. Harmonic | Digi International vs. Comtech Telecommunications Corp |
| Delta Air vs. JetBlue Airways Corp | Delta Air vs. Allegiant Travel | Delta Air vs. SkyWest | Delta Air vs. Air Transport Services |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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