Correlation Between Raytheon Technologies and Delta Air
Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies 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 Raytheon Technologies and Delta Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raytheon Technologies and Delta Air Lines, you can compare the effects of market volatilities on Raytheon Technologies 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 Raytheon Technologies with a short position of Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and Delta Air.
Diversification Opportunities for Raytheon Technologies and Delta Air
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Raytheon and Delta is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies 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 Raytheon Technologies 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 Raytheon Technologies 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 Raytheon Technologies i.e., Raytheon Technologies and Delta Air go up and down completely randomly.
Pair Corralation between Raytheon Technologies and Delta Air
Assuming the 90 days trading horizon Raytheon Technologies is expected to under-perform the Delta Air. But the stock apears to be less risky and, when comparing its historical volatility, Raytheon Technologies is 1.55 times less risky than Delta Air. The stock trades about -0.03 of its potential returns per unit of risk. The Delta Air Lines is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 31,724 in Delta Air Lines on August 29, 2024 and sell it today you would earn a total of 4,980 from holding Delta Air Lines or generate 15.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Raytheon Technologies vs. Delta Air Lines
Performance |
| Timeline |
| Raytheon Technologies |
| Delta Air Lines |
Raytheon Technologies and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raytheon Technologies and Delta Air
The main advantage of trading using opposite Raytheon Technologies and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies 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.| Raytheon Technologies vs. Fras le SA | Raytheon Technologies vs. Western Digital | Raytheon Technologies vs. Clave Indices De | Raytheon Technologies vs. BTG Pactual Logstica |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |