Correlation Between CROWN and Delta Air

Can any of the company-specific risk be diversified away by investing in both CROWN and Delta Air 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 CROWN and Delta Air into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CROWN CASTLE INTERNATIONAL and Delta Air Lines, you can compare the effects of market volatilities on CROWN and Delta Air 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 CROWN with a short position of Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of CROWN and Delta Air.

Diversification Opportunities for CROWN and Delta Air

-0.75

Correlation Coefficient

CROWN  Delta Air

Pay attention - limited upside

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

Pair Corralation between CROWN and Delta Air

Assuming the 90 days trading horizon CROWN is expected to generate 38.55 times less return on investment than Delta Air. But when comparing it to its historical volatility, CROWN CASTLE INTERNATIONAL is 2.15 times less risky than Delta Air. It trades about 0.01 of its potential returns per unit of risk. Delta Air Lines is currently generating about 0.25 of returns per unit of risk over similar time horizon. 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	90.48%
Values	Daily Returns

CROWN CASTLE INTERNATIONAL  vs.  Delta Air Lines

CROWN CASTLE INTERNA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CROWN CASTLE INTERNATIONAL are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CROWN is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with CROWN and Delta Air

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

The idea behind CROWN CASTLE INTERNATIONAL and Delta Air Lines 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.