Correlation Between DELTA AIR and Evotec SE

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

Diversification Opportunities for DELTA AIR and Evotec SE

0.67

Correlation Coefficient

DELTA AIR  Evotec SE

Poor diversification

The 3 months correlation between DELTA and Evotec is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding DELTA AIR LINES and Evotec SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evotec 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 Evotec SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evotec SE has no effect on the direction of DELTA AIR i.e., DELTA AIR and Evotec SE go up and down completely randomly.

Pair Corralation between DELTA AIR and Evotec SE

Assuming the 90 days trading horizon DELTA AIR LINES is expected to generate 0.87 times more return on investment than Evotec SE. However, DELTA AIR LINES is 1.15 times less risky than Evotec SE. It trades about 0.08 of its potential returns per unit of risk. Evotec SE is currently generating about -0.14 per unit of risk. If you would invest  6,140  in DELTA AIR LINES on October 25, 2024 and sell it today you would earn a total of  372.00  from holding DELTA AIR LINES or generate 6.06% return on investment over 90 days.

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

DELTA AIR LINES  vs.  Evotec SE

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. In spite of comparatively uncertain basic indicators, DELTA AIR unveiled solid returns over the last few months and may actually be approaching a breakup point.

Evotec SE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evotec SE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Evotec SE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DELTA AIR and Evotec SE

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

The idea behind DELTA AIR LINES and Evotec 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.

Check out your portfolio center.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.