Correlation Between Sealed Air and Delta Air

Can any of the company-specific risk be diversified away by investing in both Sealed Air 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 Sealed Air and Delta Air into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sealed Air Corp and Delta Air Lines, you can compare the effects of market volatilities on Sealed Air 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 Sealed Air with a short position of Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Delta Air.

Diversification Opportunities for Sealed Air and Delta Air

0.58

Correlation Coefficient

Sealed Air  Delta Air

Very weak diversification

The 3 months correlation between Sealed and Delta is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air Corp 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 Sealed 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 Sealed Air Corp 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 Sealed Air i.e., Sealed Air and Delta Air go up and down completely randomly.

Pair Corralation between Sealed Air and Delta Air

Assuming the 90 days trading horizon Sealed Air Corp is expected to generate 0.63 times more return on investment than Delta Air. However, Sealed Air Corp is 1.59 times less risky than Delta Air. It trades about 0.11 of its potential returns per unit of risk. Delta Air Lines is currently generating about -0.07 per unit of risk. If you would invest  3,498  in Sealed Air Corp on September 17, 2024 and sell it today you would earn a total of  94.00  from holding Sealed Air Corp or generate 2.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.48%
Values	Daily Returns

Sealed Air Corp  vs.  Delta Air Lines

Sealed Air Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sealed Air Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sealed Air is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with Sealed Air and Delta Air

The main advantage of trading using opposite Sealed Air and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air 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.

The idea behind Sealed Air Corp and Delta Air Lines 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.