Correlation Between DELTA AIR and BROOKDALE
Can any of the company-specific risk be diversified away by investing in both DELTA AIR and BROOKDALE 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 BROOKDALE 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 BROOKDALE SR LIVING, you can compare the effects of market volatilities on DELTA AIR and BROOKDALE 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 BROOKDALE. Check out your portfolio center. Please also check ongoing floating volatility patterns of DELTA AIR and BROOKDALE.
Diversification Opportunities for DELTA AIR and BROOKDALE
Pay attention - limited upside
The 3 months correlation between DELTA and BROOKDALE is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding DELTA AIR LINES and BROOKDALE SR LIVING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROOKDALE SR LIVING 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 BROOKDALE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROOKDALE SR LIVING has no effect on the direction of DELTA AIR i.e., DELTA AIR and BROOKDALE go up and down completely randomly.
Pair Corralation between DELTA AIR and BROOKDALE
Assuming the 90 days trading horizon DELTA AIR LINES is expected to generate 0.79 times more return on investment than BROOKDALE. However, DELTA AIR LINES is 1.27 times less risky than BROOKDALE. It trades about 0.1 of its potential returns per unit of risk. BROOKDALE SR LIVING is currently generating about 0.01 per unit of risk. If you would invest 3,719 in DELTA AIR LINES on September 12, 2024 and sell it today you would earn a total of 2,311 from holding DELTA AIR LINES or generate 62.14% 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. BROOKDALE SR LIVING
Performance |
| Timeline |
| DELTA AIR LINES |
| BROOKDALE SR LIVING |
DELTA AIR and BROOKDALE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DELTA AIR and BROOKDALE
The main advantage of trading using opposite DELTA AIR and BROOKDALE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DELTA AIR position performs unexpectedly, BROOKDALE 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 BROOKDALE will offset losses from the drop in BROOKDALE's long position.The idea behind DELTA AIR LINES and BROOKDALE SR LIVING pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| BROOKDALE vs. FARO Technologies | BROOKDALE vs. DELTA AIR LINES | BROOKDALE vs. Altair Engineering | BROOKDALE vs. Digilife Technologies Limited |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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