Correlation Between Delta Air and Summit Materials

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

Diversification Opportunities for Delta Air and Summit Materials

0.93

Correlation Coefficient

Delta Air  Summit Materials

Almost no diversification

The 3 months correlation between Delta and Summit is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Summit Materials Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Delta Air i.e., Delta Air and Summit Materials go up and down completely randomly.

Pair Corralation between Delta Air and Summit Materials

Assuming the 90 days trading horizon Delta Air is expected to generate 1.29 times less return on investment than Summit Materials. But when comparing it to its historical volatility, Delta Air Lines is 1.08 times less risky than Summit Materials. It trades about 0.11 of its potential returns per unit of risk. Summit Materials Cl is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,595  in Summit Materials Cl on October 4, 2024 and sell it today you would earn a total of  1,469  from holding Summit Materials Cl or generate 40.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.21%
Values	Daily Returns

Delta Air Lines  vs.  Summit Materials Cl

Delta Air Lines

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Delta Air unveiled solid returns over the last few months and may actually be approaching a breakup point.

Summit Materials

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials Cl are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Summit Materials unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delta Air and Summit Materials

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

The idea behind Delta Air Lines and Summit Materials Cl 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.