Correlation Between Delta Air and Rocket Internet

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

Diversification Opportunities for Delta Air and Rocket Internet

0.09

Correlation Coefficient

Delta Air  Rocket Internet

Significant diversification

The 3 months correlation between Delta and Rocket is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Rocket Internet SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocket Internet SE 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 Rocket Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocket Internet SE has no effect on the direction of Delta Air i.e., Delta Air and Rocket Internet go up and down completely randomly.

Pair Corralation between Delta Air and Rocket Internet

Assuming the 90 days horizon Delta Air Lines is expected to generate 1.75 times more return on investment than Rocket Internet. However, Delta Air is 1.75 times more volatile than Rocket Internet SE. It trades about 0.19 of its potential returns per unit of risk. Rocket Internet SE is currently generating about 0.05 per unit of risk. If you would invest  5,029  in Delta Air Lines on October 26, 2024 and sell it today you would earn a total of  1,587  from holding Delta Air Lines or generate 31.56% return on investment over 90 days.

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

Delta Air Lines  vs.  Rocket Internet SE

Delta Air Lines

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Delta Air reported solid returns over the last few months and may actually be approaching a breakup point.

Rocket Internet SE

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rocket Internet SE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Rocket Internet is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Delta Air and Rocket Internet

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

The idea behind Delta Air Lines and Rocket Internet SE 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.