Correlation Between Delta Air and SmartSet Automation

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

Diversification Opportunities for Delta Air and SmartSet Automation

-0.75

Correlation Coefficient

Delta Air  SmartSet Automation

Pay attention - limited upside

The 3 months correlation between Delta and SmartSet is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and SmartSet Automation LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartSet Automation LLC 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 SmartSet Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartSet Automation LLC has no effect on the direction of Delta Air i.e., Delta Air and SmartSet Automation go up and down completely randomly.

Pair Corralation between Delta Air and SmartSet Automation

Considering the 90-day investment horizon Delta Air Lines is expected to generate 0.2 times more return on investment than SmartSet Automation. However, Delta Air Lines is 4.96 times less risky than SmartSet Automation. It trades about 0.25 of its potential returns per unit of risk. SmartSet Automation LLC is currently generating about -0.01 per unit of risk. If you would invest  4,505  in Delta Air Lines on September 13, 2024 and sell it today you would earn a total of  1,843  from holding Delta Air Lines or generate 40.91% return on investment over 90 days.

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

Delta Air Lines  vs.  SmartSet Automation LLC

Delta Air Lines

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 19 (%) 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.

SmartSet Automation LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SmartSet Automation LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Delta Air and SmartSet Automation

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

The idea behind Delta Air Lines and SmartSet Automation LLC 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.