Correlation Between Delta Air and Playstudios

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

Diversification Opportunities for Delta Air and Playstudios

0.66

Correlation Coefficient

Delta Air  Playstudios

Poor diversification

The 3 months correlation between Delta and Playstudios is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Playstudios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playstudios 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 Playstudios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playstudios has no effect on the direction of Delta Air i.e., Delta Air and Playstudios go up and down completely randomly.

Pair Corralation between Delta Air and Playstudios

Considering the 90-day investment horizon Delta Air Lines is expected to generate 0.45 times more return on investment than Playstudios. However, Delta Air Lines is 2.2 times less risky than Playstudios. It trades about -0.06 of its potential returns per unit of risk. Playstudios is currently generating about -0.27 per unit of risk. If you would invest  6,277  in Delta Air Lines on October 11, 2024 and sell it today you would lose (135.00) from holding Delta Air Lines or give up 2.15% of portfolio value over 90 days.

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

Delta Air Lines  vs.  Playstudios

Delta Air Lines

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 11 (%) 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.

Playstudios

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Playstudios are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Playstudios unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delta Air and Playstudios

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

The idea behind Delta Air Lines and Playstudios 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.