Correlation Between Delta Air and SCOTT TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both Delta Air and SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY, you can compare the effects of market volatilities on Delta Air and SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and SCOTT TECHNOLOGY.
Diversification Opportunities for Delta Air and SCOTT TECHNOLOGY
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Delta and SCOTT is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and SCOTT TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOTT TECHNOLOGY has no effect on the direction of Delta Air i.e., Delta Air and SCOTT TECHNOLOGY go up and down completely randomly.
Pair Corralation between Delta Air and SCOTT TECHNOLOGY
Assuming the 90 days horizon Delta Air Lines is expected to generate 1.33 times more return on investment than SCOTT TECHNOLOGY. However, Delta Air is 1.33 times more volatile than SCOTT TECHNOLOGY. It trades about 0.18 of its potential returns per unit of risk. SCOTT TECHNOLOGY is currently generating about 0.01 per unit of risk. If you would invest 5,838 in Delta Air Lines on October 30, 2024 and sell it today you would earn a total of 565.00 from holding Delta Air Lines or generate 9.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. SCOTT TECHNOLOGY
Performance |
| Timeline |
| Delta Air Lines |
| SCOTT TECHNOLOGY |
Delta Air and SCOTT TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and SCOTT TECHNOLOGY
The main advantage of trading using opposite Delta Air and SCOTT TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY will offset losses from the drop in SCOTT TECHNOLOGY's long position.| Delta Air vs. Air China Limited | Delta Air vs. AIR CHINA LTD | Delta Air vs. RYANAIR HLDGS ADR | Delta Air vs. Southwest Airlines Co |
| SCOTT TECHNOLOGY vs. Apple Inc | SCOTT TECHNOLOGY vs. Apple Inc | SCOTT TECHNOLOGY vs. Apple Inc | SCOTT TECHNOLOGY vs. Apple Inc |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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