Correlation Between United Airlines and Delta Air
Can any of the company-specific risk be diversified away by investing in both United Airlines 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 Airlines 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 Airlines Holdings and Delta Air Lines, you can compare the effects of market volatilities on United Airlines 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 Airlines with a short position of Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Airlines and Delta Air.
Diversification Opportunities for United Airlines and Delta Air
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between United and Delta is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding United Airlines Holdings 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 Airlines 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 Airlines Holdings 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 Airlines i.e., United Airlines and Delta Air go up and down completely randomly.
Pair Corralation between United Airlines and Delta Air
Assuming the 90 days trading horizon United Airlines Holdings is expected to generate 0.9 times more return on investment than Delta Air. However, United Airlines Holdings is 1.11 times less risky than Delta Air. It trades about 0.56 of its potential returns per unit of risk. Delta Air Lines is currently generating about 0.33 per unit of risk. If you would invest 145,000 in United Airlines Holdings on August 24, 2024 and sell it today you would earn a total of 48,000 from holding United Airlines Holdings or generate 33.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Airlines Holdings vs. Delta Air Lines
Performance |
| Timeline |
| United Airlines Holdings |
| Delta Air Lines |
United Airlines and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Airlines and Delta Air
The main advantage of trading using opposite United Airlines and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Airlines 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 Airlines vs. Delta Air Lines | United Airlines vs. Southwest Airlines | United Airlines vs. JetBlue Airways | United Airlines vs. Controladora Vuela Compaa |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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