Correlation Between LPL Financial and Delta Air

Can any of the company-specific risk be diversified away by investing in both LPL Financial and Delta Air 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 LPL Financial and Delta Air into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LPL Financial Holdings and Delta Air Lines, you can compare the effects of market volatilities on LPL Financial and Delta Air 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 LPL Financial with a short position of Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPL Financial and Delta Air.

Diversification Opportunities for LPL Financial and Delta Air

0.73

Correlation Coefficient

LPL Financial  Delta Air

Poor diversification

The 3 months correlation between LPL and Delta is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding LPL Financial Holdings and Delta Air Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Air Lines and LPL Financial 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 LPL Financial Holdings are associated (or correlated) with Delta Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Air Lines has no effect on the direction of LPL Financial i.e., LPL Financial and Delta Air go up and down completely randomly.

Pair Corralation between LPL Financial and Delta Air

Assuming the 90 days trading horizon LPL Financial Holdings is expected to generate 0.66 times more return on investment than Delta Air. However, LPL Financial Holdings is 1.51 times less risky than Delta Air. It trades about -0.05 of its potential returns per unit of risk. Delta Air Lines is currently generating about -0.17 per unit of risk. If you would invest  11,307  in LPL Financial Holdings on December 22, 2024 and sell it today you would lose (816.00) from holding LPL Financial Holdings or give up 7.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.61%
Values	Daily Returns

LPL Financial Holdings  vs.  Delta Air Lines

LPL Financial Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days LPL Financial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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.

Pair Trading with LPL Financial and Delta Air

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

The idea behind LPL Financial Holdings and Delta Air Lines 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.