Correlation Between Delta Air and AbbVie

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

Diversification Opportunities for Delta Air and AbbVie

-0.82

Correlation Coefficient

Delta Air  AbbVie

Pay attention - limited upside

The 3 months correlation between Delta and AbbVie is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and AbbVie Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbbVie 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 AbbVie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbbVie Inc has no effect on the direction of Delta Air i.e., Delta Air and AbbVie go up and down completely randomly.

Pair Corralation between Delta Air and AbbVie

Assuming the 90 days trading horizon Delta Air Lines is expected to under-perform the AbbVie. In addition to that, Delta Air is 1.93 times more volatile than AbbVie Inc. It trades about -0.19 of its total potential returns per unit of risk. AbbVie Inc is currently generating about 0.09 per unit of volatility. If you would invest  6,875  in AbbVie Inc on December 24, 2024 and sell it today you would earn a total of  564.00  from holding AbbVie Inc or generate 8.2% return on investment over 90 days.

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

Delta Air Lines  vs.  AbbVie 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. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat 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.

AbbVie Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AbbVie Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, AbbVie may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Delta Air and AbbVie

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

The idea behind Delta Air Lines and AbbVie 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.