Correlation Between Delta Air and 3M
Can any of the company-specific risk be diversified away by investing in both Delta Air and 3M 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 3M 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 3M Company, you can compare the effects of market volatilities on Delta Air and 3M 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 3M. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and 3M.
Diversification Opportunities for Delta Air and 3M
Very poor diversification
The 3 months correlation between Delta and 3M is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and 3M Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3M Company 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 3M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3M Company has no effect on the direction of Delta Air i.e., Delta Air and 3M go up and down completely randomly.
Pair Corralation between Delta Air and 3M
Considering the 90-day investment horizon Delta Air is expected to generate 1.58 times less return on investment than 3M. In addition to that, Delta Air is 1.08 times more volatile than 3M Company. It trades about 0.12 of its total potential returns per unit of risk. 3M Company is currently generating about 0.2 per unit of volatility. If you would invest 8,581 in 3M Company on January 26, 2024 and sell it today you would earn a total of 621.00 from holding 3M Company or generate 7.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Delta Air Lines vs. 3M Company
Performance |
Timeline |
Delta Air Lines |
3M Company |
Delta Air and 3M Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Delta Air and 3M
The main advantage of trading using opposite Delta Air and 3M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, 3M 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 3M will offset losses from the drop in 3M'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 |
3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |