Correlation Between Delta Air and Algonquin Power
Can any of the company-specific risk be diversified away by investing in both Delta Air and Algonquin Power 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 Delta Air and Algonquin Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delta Air Lines and Algonquin Power Utilities, you can compare the effects of market volatilities on Delta Air and Algonquin Power 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 Delta Air with a short position of Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Algonquin Power.
Diversification Opportunities for Delta Air and Algonquin Power
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Delta and Algonquin is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Algonquin Power Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algonquin Power Utilities and Delta Air 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 Delta Air Lines are associated (or correlated) with Algonquin Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algonquin Power Utilities has no effect on the direction of Delta Air i.e., Delta Air and Algonquin Power go up and down completely randomly.
Pair Corralation between Delta Air and Algonquin Power
Assuming the 90 days horizon Delta Air Lines is expected to generate 1.2 times more return on investment than Algonquin Power. However, Delta Air is 1.2 times more volatile than Algonquin Power Utilities. It trades about 0.22 of its potential returns per unit of risk. Algonquin Power Utilities is currently generating about -0.08 per unit of risk. If you would invest 3,481 in Delta Air Lines on November 3, 2024 and sell it today you would earn a total of 3,073 from holding Delta Air Lines or generate 88.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. Algonquin Power Utilities
Performance |
| Timeline |
| Delta Air Lines |
| Algonquin Power Utilities |
Delta Air and Algonquin Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Algonquin Power
The main advantage of trading using opposite Delta Air and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Algonquin Power 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 Algonquin Power will offset losses from the drop in Algonquin Power's long position.| Delta Air vs. Bio Techne Corp | Delta Air vs. United Insurance Holdings | Delta Air vs. BJs Restaurants | Delta Air vs. Easy Software AG |
| Algonquin Power vs. INVITATION HOMES DL | Algonquin Power vs. MAVEN WIRELESS SWEDEN | Algonquin Power vs. Corporate Office Properties | Algonquin Power vs. OFFICE DEPOT |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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