Correlation Between Delta Air and Sabien Technology

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

Diversification Opportunities for Delta Air and Sabien Technology

0.41

Correlation Coefficient

Delta Air  Sabien Technology

Very weak diversification

The 3 months correlation between Delta and Sabien is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Sabien Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabien Technology 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 Sabien Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabien Technology has no effect on the direction of Delta Air i.e., Delta Air and Sabien Technology go up and down completely randomly.

Pair Corralation between Delta Air and Sabien Technology

Assuming the 90 days trading horizon Delta Air Lines is expected to generate 0.54 times more return on investment than Sabien Technology. However, Delta Air Lines is 1.85 times less risky than Sabien Technology. It trades about 0.3 of its potential returns per unit of risk. Sabien Technology Group is currently generating about 0.15 per unit of risk. If you would invest  4,211  in Delta Air Lines on August 31, 2024 and sell it today you would earn a total of  2,161  from holding Delta Air Lines or generate 51.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Delta Air Lines  vs.  Sabien Technology Group

Delta Air Lines

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 23 (%) 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.

Sabien Technology

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sabien Technology Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sabien Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delta Air and Sabien Technology

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

The idea behind Delta Air Lines and Sabien Technology Group 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.