Correlation Between DELTA AIR and INTERSHOP Communications

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

Diversification Opportunities for DELTA AIR and INTERSHOP Communications

0.82

Correlation Coefficient

DELTA AIR  INTERSHOP Communications

Very poor diversification

The 3 months correlation between DELTA and INTERSHOP is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding DELTA AIR LINES and INTERSHOP Communications Aktie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERSHOP Communications 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 INTERSHOP Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERSHOP Communications has no effect on the direction of DELTA AIR i.e., DELTA AIR and INTERSHOP Communications go up and down completely randomly.

Pair Corralation between DELTA AIR and INTERSHOP Communications

Assuming the 90 days trading horizon DELTA AIR LINES is expected to generate 0.99 times more return on investment than INTERSHOP Communications. However, DELTA AIR LINES is 1.01 times less risky than INTERSHOP Communications. It trades about 0.28 of its potential returns per unit of risk. INTERSHOP Communications Aktiengesellschaft is currently generating about 0.1 per unit of risk. If you would invest  3,986  in DELTA AIR LINES on September 12, 2024 and sell it today you would earn a total of  2,044  from holding DELTA AIR LINES or generate 51.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

DELTA AIR LINES  vs.  INTERSHOP Communications Aktie

DELTA AIR LINES

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DELTA AIR LINES are ranked lower than 22 (%) 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.

INTERSHOP Communications

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INTERSHOP Communications Aktiengesellschaft are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, INTERSHOP Communications exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DELTA AIR and INTERSHOP Communications

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

The idea behind DELTA AIR LINES and INTERSHOP Communications Aktiengesellschaft 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.