Correlation Between Pfizer and Delta Air
Can any of the company-specific risk be diversified away by investing in both Pfizer 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 Pfizer and Delta Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and Delta Air Lines, you can compare the effects of market volatilities on Pfizer 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 Pfizer with a short position of Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Delta Air.
Diversification Opportunities for Pfizer and Delta Air
Very good diversification
The 3 months correlation between Pfizer and Delta is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc 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 Pfizer 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 Pfizer Inc 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 Pfizer i.e., Pfizer and Delta Air go up and down completely randomly.
Pair Corralation between Pfizer and Delta Air
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Delta Air. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 1.12 times less risky than Delta Air. The stock trades about -0.05 of its potential returns per unit of risk. The Delta Air Lines is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 3,954 in Delta Air Lines on January 26, 2024 and sell it today you would earn a total of 840.00 from holding Delta Air Lines or generate 21.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. Delta Air Lines
Performance |
| Timeline |
| Pfizer Inc |
| Delta Air Lines |
Pfizer and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and Delta Air
The main advantage of trading using opposite Pfizer and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer 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.| Pfizer vs. Aurora Cannabis | Pfizer vs. Shuttle Pharmaceuticals | Pfizer vs. Lifecore Biomedical | Pfizer vs. Lucy Scientific Discovery |
| Delta Air vs. American Airlines Group | Delta Air vs. Southwest Airlines | Delta Air vs. JetBlue Airways Corp | Delta Air vs. Spirit Airlines |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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