Correlation Between KENNAMETAL INC and DELTA AIR
Can any of the company-specific risk be diversified away by investing in both KENNAMETAL INC 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 KENNAMETAL INC and DELTA AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KENNAMETAL INC and DELTA AIR LINES, you can compare the effects of market volatilities on KENNAMETAL INC 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 KENNAMETAL INC with a short position of DELTA AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENNAMETAL INC and DELTA AIR.
Diversification Opportunities for KENNAMETAL INC and DELTA AIR
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KENNAMETAL and DELTA is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding KENNAMETAL INC 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 KENNAMETAL INC 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 KENNAMETAL INC 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 KENNAMETAL INC i.e., KENNAMETAL INC and DELTA AIR go up and down completely randomly.
Pair Corralation between KENNAMETAL INC and DELTA AIR
Assuming the 90 days trading horizon KENNAMETAL INC is expected to under-perform the DELTA AIR. But the stock apears to be less risky and, when comparing its historical volatility, KENNAMETAL INC is 1.13 times less risky than DELTA AIR. The stock trades about -0.16 of its potential returns per unit of risk. The DELTA AIR LINES is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 5,920 in DELTA AIR LINES on September 20, 2024 and sell it today you would lose (69.00) from holding DELTA AIR LINES or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KENNAMETAL INC vs. DELTA AIR LINES
Performance |
| Timeline |
| KENNAMETAL INC |
| DELTA AIR LINES |
KENNAMETAL INC and DELTA AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENNAMETAL INC and DELTA AIR
The main advantage of trading using opposite KENNAMETAL INC and DELTA AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENNAMETAL INC 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.| KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Apple Inc | KENNAMETAL INC vs. Microsoft |
| DELTA AIR vs. UNIVMUSIC GRPADR050 | DELTA AIR vs. JAPAN AIRLINES | DELTA AIR vs. KENNAMETAL INC | DELTA AIR vs. SINGAPORE AIRLINES |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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