Correlation Between DELTA AIR and Apple

Can any of the company-specific risk be diversified away by investing in both DELTA AIR and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on DELTA AIR and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of DELTA AIR and Apple.

Diversification Opportunities for DELTA AIR and Apple

0.54

Correlation Coefficient

DELTA AIR  Apple

Very weak diversification

The 3 months correlation between DELTA and Apple is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding DELTA AIR LINES and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of DELTA AIR i.e., DELTA AIR and Apple go up and down completely randomly.

Pair Corralation between DELTA AIR and Apple

Assuming the 90 days trading horizon DELTA AIR LINES is expected to under-perform the Apple. But the stock apears to be less risky and, when comparing its historical volatility, DELTA AIR LINES is 1.25 times less risky than Apple. The stock trades about -0.08 of its potential returns per unit of risk. The Apple Inc is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  16,012  in Apple Inc on March 2, 2024 and sell it today you would earn a total of  1,696  from holding Apple Inc or generate 10.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

DELTA AIR LINES  vs.  Apple Inc

DELTA AIR LINES

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DELTA AIR LINES are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, DELTA AIR unveiled solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with DELTA AIR and Apple

The main advantage of trading using opposite DELTA AIR and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DELTA AIR position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.

The idea behind DELTA AIR LINES and Apple Inc 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.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.