Correlation Between Delta Air and Pandora AS
Can any of the company-specific risk be diversified away by investing in both Delta Air and Pandora AS 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 Pandora AS 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 Pandora AS, you can compare the effects of market volatilities on Delta Air and Pandora AS 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 Pandora AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Pandora AS.
Diversification Opportunities for Delta Air and Pandora AS
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Delta and Pandora is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Pandora AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pandora AS 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 Pandora AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pandora AS has no effect on the direction of Delta Air i.e., Delta Air and Pandora AS go up and down completely randomly.
Pair Corralation between Delta Air and Pandora AS
Considering the 90-day investment horizon Delta Air is expected to generate 2.49 times less return on investment than Pandora AS. But when comparing it to its historical volatility, Delta Air Lines is 1.07 times less risky than Pandora AS. It trades about 0.06 of its potential returns per unit of risk. Pandora AS is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 38,677 in Pandora AS on January 24, 2024 and sell it today you would earn a total of 71,223 from holding Pandora AS or generate 184.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Delta Air Lines vs. Pandora AS
Performance |
| Timeline |
| Delta Air Lines |
| Pandora AS |
Delta Air and Pandora AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Pandora AS
The main advantage of trading using opposite Delta Air and Pandora AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Pandora AS 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 Pandora AS will offset losses from the drop in Pandora AS's long position.| 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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