Correlation Between Delta Air and Dianthus Therapeutics

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

Diversification Opportunities for Delta Air and Dianthus Therapeutics

0.09

Correlation Coefficient

Delta Air  Dianthus Therapeutics

Significant diversification

The 3 months correlation between Delta and Dianthus is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Dianthus Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dianthus Therapeutics 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 Dianthus Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dianthus Therapeutics has no effect on the direction of Delta Air i.e., Delta Air and Dianthus Therapeutics go up and down completely randomly.

Pair Corralation between Delta Air and Dianthus Therapeutics

Considering the 90-day investment horizon Delta Air Lines is expected to under-perform the Dianthus Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Delta Air Lines is 1.71 times less risky than Dianthus Therapeutics. The stock trades about -0.13 of its potential returns per unit of risk. The Dianthus Therapeutics is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,380  in Dianthus Therapeutics on December 20, 2024 and sell it today you would lose (321.00) from holding Dianthus Therapeutics or give up 13.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Delta Air Lines  vs.  Dianthus Therapeutics

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. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Dianthus Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dianthus Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Delta Air and Dianthus Therapeutics

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

The idea behind Delta Air Lines and Dianthus Therapeutics 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.