Correlation Between DELTA AIR and KRISPY KREME

Can any of the company-specific risk be diversified away by investing in both DELTA AIR and KRISPY KREME 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 KRISPY KREME 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 KRISPY KREME DL 01, you can compare the effects of market volatilities on DELTA AIR and KRISPY KREME 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 KRISPY KREME. Check out your portfolio center. Please also check ongoing floating volatility patterns of DELTA AIR and KRISPY KREME.

Diversification Opportunities for DELTA AIR and KRISPY KREME

0.07

Correlation Coefficient

DELTA AIR  KRISPY KREME

Significant diversification

The 3 months correlation between DELTA and KRISPY is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding DELTA AIR LINES and KRISPY KREME DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KRISPY KREME DL 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 KRISPY KREME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KRISPY KREME DL has no effect on the direction of DELTA AIR i.e., DELTA AIR and KRISPY KREME go up and down completely randomly.

Pair Corralation between DELTA AIR and KRISPY KREME

Assuming the 90 days trading horizon DELTA AIR LINES is expected to generate 1.31 times more return on investment than KRISPY KREME. However, DELTA AIR is 1.31 times more volatile than KRISPY KREME DL 01. It trades about -0.02 of its potential returns per unit of risk. KRISPY KREME DL 01 is currently generating about -0.35 per unit of risk. If you would invest  5,920  in DELTA AIR LINES on September 20, 2024 and sell it today you would lose (69.00) from holding DELTA AIR LINES or give up 1.17% of portfolio value over 90 days.

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

DELTA AIR LINES  vs.  KRISPY KREME DL 01

DELTA AIR LINES

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DELTA AIR LINES are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, DELTA AIR unveiled solid returns over the last few months and may actually be approaching a breakup point.

KRISPY KREME DL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KRISPY KREME DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with DELTA AIR and KRISPY KREME

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

The idea behind DELTA AIR LINES and KRISPY KREME DL 01 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.