Correlation Between Delta Air and Xeros Technology

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

Diversification Opportunities for Delta Air and Xeros Technology

0.37

Correlation Coefficient

Delta Air  Xeros Technology

Weak diversification

The 3 months correlation between Delta and Xeros is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Xeros Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xeros Technology 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 Xeros Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xeros Technology has no effect on the direction of Delta Air i.e., Delta Air and Xeros Technology go up and down completely randomly.

Pair Corralation between Delta Air and Xeros Technology

Assuming the 90 days trading horizon Delta Air is expected to generate 1.37 times less return on investment than Xeros Technology. But when comparing it to its historical volatility, Delta Air Lines is 1.35 times less risky than Xeros Technology. It trades about 0.19 of its potential returns per unit of risk. Xeros Technology Group is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  100.00  in Xeros Technology Group on April 25, 2025 and sell it today you would earn a total of  50.00  from holding Xeros Technology Group or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Delta Air Lines  vs.  Xeros Technology Group

Delta Air Lines

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Delta Air unveiled solid returns over the last few months and may actually be approaching a breakup point.

Xeros Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xeros Technology Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Xeros Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delta Air and Xeros Technology

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

The idea behind Delta Air Lines and Xeros Technology Group 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.