Correlation Between Alliance Data and DELTA AIR
Can any of the company-specific risk be diversified away by investing in both Alliance Data 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 Alliance Data and DELTA AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Data Systems and DELTA AIR LINES, you can compare the effects of market volatilities on Alliance Data 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 Alliance Data with a short position of DELTA AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Data and DELTA AIR.
Diversification Opportunities for Alliance Data and DELTA AIR
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alliance and DELTA is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Data Systems 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 Alliance Data 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 Alliance Data Systems 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 Alliance Data i.e., Alliance Data and DELTA AIR go up and down completely randomly.
Pair Corralation between Alliance Data and DELTA AIR
Assuming the 90 days trading horizon Alliance Data Systems is expected to generate 0.92 times more return on investment than DELTA AIR. However, Alliance Data Systems is 1.09 times less risky than DELTA AIR. It trades about 0.11 of its potential returns per unit of risk. DELTA AIR LINES is currently generating about 0.09 per unit of risk. If you would invest 5,524 in Alliance Data Systems on October 30, 2024 and sell it today you would earn a total of 442.00 from holding Alliance Data Systems or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alliance Data Systems vs. DELTA AIR LINES
Performance |
| Timeline |
| Alliance Data Systems |
| DELTA AIR LINES |
Alliance Data and DELTA AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Data and DELTA AIR
The main advantage of trading using opposite Alliance Data and DELTA AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Data 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.| Alliance Data vs. TITANIUM TRANSPORTGROUP | Alliance Data vs. ULTRA CLEAN HLDGS | Alliance Data vs. Singapore Telecommunications Limited | Alliance Data vs. Air Transport Services |
| DELTA AIR vs. Lery Seafood Group | DELTA AIR vs. SENECA FOODS A | DELTA AIR vs. UNITED RENTALS | DELTA AIR vs. FUYO GENERAL LEASE |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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