Correlation Between Delta Air and Kenvue

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

Diversification Opportunities for Delta Air and Kenvue

0.22

Correlation Coefficient

Delta Air  Kenvue

Modest diversification

The 3 months correlation between Delta and Kenvue is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Kenvue Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenvue 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 Kenvue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenvue Inc has no effect on the direction of Delta Air i.e., Delta Air and Kenvue go up and down completely randomly.

Pair Corralation between Delta Air and Kenvue

Considering the 90-day investment horizon Delta Air Lines is expected to generate 1.22 times more return on investment than Kenvue. However, Delta Air is 1.22 times more volatile than Kenvue Inc. It trades about 0.07 of its potential returns per unit of risk. Kenvue Inc is currently generating about -0.02 per unit of risk. If you would invest  3,897  in Delta Air Lines on October 25, 2024 and sell it today you would earn a total of  2,848  from holding Delta Air Lines or generate 73.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	87.45%
Values	Daily Returns

Delta Air Lines  vs.  Kenvue Inc

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. Despite quite conflicting basic indicators, Delta Air disclosed solid returns over the last few months and may actually be approaching a breakup point.

Kenvue Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kenvue Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Delta Air and Kenvue

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

The idea behind Delta Air Lines and Kenvue 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 Stocks Directory module to find actively traded stocks across global markets.