Correlation Between Delta Air and Biogen

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

Diversification Opportunities for Delta Air and Biogen

0.51

Correlation Coefficient

Delta Air  Biogen

Very weak diversification

The 3 months correlation between Delta and Biogen is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Biogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biogen Inc 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 Biogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biogen Inc has no effect on the direction of Delta Air i.e., Delta Air and Biogen go up and down completely randomly.

Pair Corralation between Delta Air and Biogen

Assuming the 90 days trading horizon Delta Air Lines is expected to under-perform the Biogen. In addition to that, Delta Air is 1.82 times more volatile than Biogen Inc. It trades about -0.17 of its total potential returns per unit of risk. Biogen Inc is currently generating about -0.05 per unit of volatility. If you would invest  301,400  in Biogen Inc on December 30, 2024 and sell it today you would lose (16,000) from holding Biogen Inc or give up 5.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Delta Air Lines  vs.  Biogen Inc

Delta Air Lines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Delta Air Lines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Biogen Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Biogen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Biogen is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Delta Air and Biogen

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

The idea behind Delta Air Lines and Biogen Inc 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.