Correlation Between Litigation Capital and Delta Air
Can any of the company-specific risk be diversified away by investing in both Litigation Capital 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 Litigation Capital and Delta Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Litigation Capital Management and Delta Air Lines, you can compare the effects of market volatilities on Litigation Capital 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 Litigation Capital with a short position of Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litigation Capital and Delta Air.
Diversification Opportunities for Litigation Capital and Delta Air
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Litigation and Delta is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Litigation Capital Management 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 Litigation Capital 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 Litigation Capital Management 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 Litigation Capital i.e., Litigation Capital and Delta Air go up and down completely randomly.
Pair Corralation between Litigation Capital and Delta Air
Assuming the 90 days trading horizon Litigation Capital Management is expected to under-perform the Delta Air. But the stock apears to be less risky and, when comparing its historical volatility, Litigation Capital Management is 1.07 times less risky than Delta Air. The stock trades about -0.34 of its potential returns per unit of risk. The Delta Air Lines is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 6,444 in Delta Air Lines on September 20, 2024 and sell it today you would lose (307.00) from holding Delta Air Lines or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Litigation Capital Management vs. Delta Air Lines
Performance |
| Timeline |
| Litigation Capital |
| Delta Air Lines |
Litigation Capital and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Litigation Capital and Delta Air
The main advantage of trading using opposite Litigation Capital and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Litigation Capital 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.| Litigation Capital vs. Southern Copper Corp | Litigation Capital vs. URU Metals | Litigation Capital vs. Panther Metals PLC | Litigation Capital vs. Wheaton Precious Metals |
| Delta Air vs. Kaufman Et Broad | Delta Air vs. Pfeiffer Vacuum Technology | Delta Air vs. Check Point Software | Delta Air vs. Gaztransport et Technigaz |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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