Correlation Between DELTA AIR and American Eagle
Can any of the company-specific risk be diversified away by investing in both DELTA AIR and American Eagle 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 American Eagle 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 American Eagle Outfitters, you can compare the effects of market volatilities on DELTA AIR and American Eagle 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 American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of DELTA AIR and American Eagle.
Diversification Opportunities for DELTA AIR and American Eagle
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between DELTA and American is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding DELTA AIR LINES and American Eagle Outfitters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Eagle Outfitters 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 American Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Eagle Outfitters has no effect on the direction of DELTA AIR i.e., DELTA AIR and American Eagle go up and down completely randomly.
Pair Corralation between DELTA AIR and American Eagle
Assuming the 90 days trading horizon DELTA AIR LINES is expected to generate 0.75 times more return on investment than American Eagle. However, DELTA AIR LINES is 1.33 times less risky than American Eagle. It trades about 0.02 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.15 per unit of risk. If you would invest 5,929 in DELTA AIR LINES on October 11, 2024 and sell it today you would earn a total of 17.00 from holding DELTA AIR LINES or generate 0.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DELTA AIR LINES vs. American Eagle Outfitters
Performance |
| Timeline |
| DELTA AIR LINES |
| American Eagle Outfitters |
DELTA AIR and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DELTA AIR and American Eagle
The main advantage of trading using opposite DELTA AIR and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DELTA AIR position performs unexpectedly, American Eagle 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 American Eagle will offset losses from the drop in American Eagle's long position.| DELTA AIR vs. BII Railway Transportation | DELTA AIR vs. Rocket Internet SE | DELTA AIR vs. Lendlease Group | DELTA AIR vs. Sixt Leasing SE |
| American Eagle vs. Scottish Mortgage Investment | American Eagle vs. Shenzhen Investment Limited | American Eagle vs. DELTA AIR LINES | American Eagle vs. FIRST SAVINGS FINL |
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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