Correlation Between Delta Air and Pure Storage,

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

Diversification Opportunities for Delta Air and Pure Storage,

0.62

Correlation Coefficient

Delta Air  Pure Storage,

Poor diversification

The 3 months correlation between Delta and Pure is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Pure Storage, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Storage, 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 Pure Storage,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Storage, has no effect on the direction of Delta Air i.e., Delta Air and Pure Storage, go up and down completely randomly.

Pair Corralation between Delta Air and Pure Storage,

Assuming the 90 days trading horizon Delta Air is expected to generate 1.53 times less return on investment than Pure Storage,. But when comparing it to its historical volatility, Delta Air Lines is 1.59 times less risky than Pure Storage,. It trades about 0.07 of its potential returns per unit of risk. Pure Storage, is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,671  in Pure Storage, on October 11, 2024 and sell it today you would earn a total of  5,169  from holding Pure Storage, or generate 110.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	85.95%
Values	Daily Returns

Delta Air Lines  vs.  Pure Storage,

Delta Air Lines

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Delta Air sustained solid returns over the last few months and may actually be approaching a breakup point.

Pure Storage,

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pure Storage, are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Pure Storage, sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delta Air and Pure Storage,

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

The idea behind Delta Air Lines and Pure Storage, 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..