Correlation Between NYSE Composite and Delta Air
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Delta Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Delta Air Lines, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Delta Air.
Diversification Opportunities for NYSE Composite and Delta Air
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Delta is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Delta Air go up and down completely randomly.
Pair Corralation between NYSE Composite and Delta Air
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.58 times less return on investment than Delta Air. But when comparing it to its historical volatility, NYSE Composite is 2.89 times less risky than Delta Air. It trades about 0.1 of its potential returns per unit of risk. Delta Air Lines is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,341 in Delta Air Lines on August 27, 2024 and sell it today you would earn a total of 2,993 from holding Delta Air Lines or generate 89.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Delta Air Lines
Performance |
| Timeline |
NYSE Composite and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Delta Air Lines
Pair trading matchups for Delta Air
Pair Trading with NYSE Composite and Delta Air
The main advantage of trading using opposite NYSE Composite and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Grocery Outlet Holding | NYSE Composite vs. Tencent Music Entertainment | NYSE Composite vs. SunLink Health Systems | NYSE Composite vs. Getty Realty |
| Delta Air vs. American Airlines Group | Delta Air vs. Southwest Airlines | Delta Air vs. JetBlue Airways Corp | Delta Air vs. Spirit 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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