Correlation Between New Oriental and Delta Air
Can any of the company-specific risk be diversified away by investing in both New Oriental 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 New Oriental and Delta Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Oriental Education and Delta Air Lines, you can compare the effects of market volatilities on New Oriental 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 New Oriental with a short position of Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Oriental and Delta Air.
Diversification Opportunities for New Oriental and Delta Air
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Delta is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education 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 New Oriental 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 New Oriental Education 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 New Oriental i.e., New Oriental and Delta Air go up and down completely randomly.
Pair Corralation between New Oriental and Delta Air
Assuming the 90 days trading horizon New Oriental is expected to generate 9.97 times less return on investment than Delta Air. In addition to that, New Oriental is 1.13 times more volatile than Delta Air Lines. It trades about 0.01 of its total potential returns per unit of risk. Delta Air Lines is currently generating about 0.14 per unit of volatility. If you would invest 89,519 in Delta Air Lines on August 30, 2024 and sell it today you would earn a total of 40,981 from holding Delta Air Lines or generate 45.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Oriental Education vs. Delta Air Lines
Performance |
| Timeline |
| New Oriental Education |
| Delta Air Lines |
New Oriental and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Oriental and Delta Air
The main advantage of trading using opposite New Oriental and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Oriental 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.| New Oriental vs. The Select Sector | New Oriental vs. SPDR Series Trust | New Oriental vs. FibroGen | New Oriental vs. iShares Trust |
| Delta Air vs. Southern Copper | Delta Air vs. McEwen Mining | Delta Air vs. Ameriprise Financial | Delta Air vs. Grupo Carso SAB |
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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