Correlation Between London Security and Delta Air
Can any of the company-specific risk be diversified away by investing in both London Security 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 London Security and Delta Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Security Plc and Delta Air Lines, you can compare the effects of market volatilities on London Security 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 London Security with a short position of Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Security and Delta Air.
Diversification Opportunities for London Security and Delta Air
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between London and Delta is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding London Security Plc 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 London Security 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 London Security Plc 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 London Security i.e., London Security and Delta Air go up and down completely randomly.
Pair Corralation between London Security and Delta Air
Assuming the 90 days trading horizon London Security Plc is expected to under-perform the Delta Air. But the stock apears to be less risky and, when comparing its historical volatility, London Security Plc is 1.32 times less risky than Delta Air. The stock trades about -0.08 of its potential returns per unit of risk. The Delta Air Lines is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 5,406 in Delta Air Lines on September 25, 2024 and sell it today you would earn a total of 723.00 from holding Delta Air Lines or generate 13.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
London Security Plc vs. Delta Air Lines
Performance |
| Timeline |
| London Security Plc |
| Delta Air Lines |
London Security and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with London Security and Delta Air
The main advantage of trading using opposite London Security and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Security 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.| London Security vs. Tungsten West PLC | London Security vs. Argo Group Limited | London Security vs. Hardide PLC | London Security vs. Gfinity PLC |
| Delta Air vs. Uniper SE | Delta Air vs. Mulberry Group PLC | Delta Air vs. London Security Plc | Delta Air vs. Triad Group PLC |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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