Correlation Between United Natural and Delta Air
Can any of the company-specific risk be diversified away by investing in both United Natural 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 United Natural and Delta Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Natural Foods, and Delta Air Lines, you can compare the effects of market volatilities on United Natural 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 United Natural with a short position of Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Delta Air.
Diversification Opportunities for United Natural and Delta Air
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Delta is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods, 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 United Natural 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 United Natural Foods, 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 United Natural i.e., United Natural and Delta Air go up and down completely randomly.
Pair Corralation between United Natural and Delta Air
Assuming the 90 days trading horizon United Natural Foods, is expected to generate 1.63 times more return on investment than Delta Air. However, United Natural is 1.63 times more volatile than Delta Air Lines. It trades about 0.13 of its potential returns per unit of risk. Delta Air Lines is currently generating about 0.08 per unit of risk. If you would invest 2,818 in United Natural Foods, on October 25, 2024 and sell it today you would earn a total of 1,165 from holding United Natural Foods, or generate 41.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 18.1% |
| Values | Daily Returns |
United Natural Foods, vs. Delta Air Lines
Performance |
| Timeline |
| United Natural Foods, |
| Delta Air Lines |
United Natural and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Delta Air
The main advantage of trading using opposite United Natural and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural 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.| United Natural vs. Taiwan Semiconductor Manufacturing | United Natural vs. Apple Inc | United Natural vs. Alibaba Group Holding | United Natural vs. Microsoft |
| Delta Air vs. Align Technology | Delta Air vs. Sumitomo Mitsui Financial | Delta Air vs. The Hartford Financial | Delta Air vs. Iron Mountain Incorporated |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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