Correlation Between Delta Air and Keurig Dr

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

Diversification Opportunities for Delta Air and Keurig Dr

-0.87

Correlation Coefficient

Delta Air  Keurig Dr

Pay attention - limited upside

The 3 months correlation between Delta and Keurig is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Keurig Dr Pepper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keurig Dr Pepper 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 Keurig Dr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keurig Dr Pepper has no effect on the direction of Delta Air i.e., Delta Air and Keurig Dr go up and down completely randomly.

Pair Corralation between Delta Air and Keurig Dr

Considering the 90-day investment horizon Delta Air Lines is expected to generate 1.85 times more return on investment than Keurig Dr. However, Delta Air is 1.85 times more volatile than Keurig Dr Pepper. It trades about 0.29 of its potential returns per unit of risk. Keurig Dr Pepper is currently generating about -0.15 per unit of risk. If you would invest  4,205  in Delta Air Lines on September 5, 2024 and sell it today you would earn a total of  2,052  from holding Delta Air Lines or generate 48.8% return on investment over 90 days.

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

Delta Air Lines  vs.  Keurig Dr Pepper

Delta Air Lines

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Delta Air disclosed solid returns over the last few months and may actually be approaching a breakup point.

Keurig Dr Pepper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keurig Dr Pepper has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Delta Air and Keurig Dr

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

The idea behind Delta Air Lines and Keurig Dr Pepper 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.