Correlation Between DELTA AIR and Linde Plc

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

Diversification Opportunities for DELTA AIR and Linde Plc

-0.49

Correlation Coefficient

DELTA AIR  Linde Plc

Very good diversification

The 3 months correlation between DELTA and Linde is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding DELTA AIR LINES and Linde plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linde plc 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 Linde Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linde plc has no effect on the direction of DELTA AIR i.e., DELTA AIR and Linde Plc go up and down completely randomly.

Pair Corralation between DELTA AIR and Linde Plc

Assuming the 90 days trading horizon DELTA AIR LINES is expected to generate 2.2 times more return on investment than Linde Plc. However, DELTA AIR is 2.2 times more volatile than Linde plc. It trades about 0.16 of its potential returns per unit of risk. Linde plc is currently generating about -0.12 per unit of risk. If you would invest  5,051  in DELTA AIR LINES on October 23, 2024 and sell it today you would earn a total of  1,280  from holding DELTA AIR LINES or generate 25.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	89.83%
Values	Daily Returns

DELTA AIR LINES  vs.  Linde plc

DELTA AIR LINES

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DELTA AIR LINES are ranked lower than 12 (%) 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.

Linde plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Linde plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with DELTA AIR and Linde Plc

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

The idea behind DELTA AIR LINES and Linde plc 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.