Correlation Between Union Pacific and Delta Air

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

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

Diversification Opportunities for Union Pacific and Delta Air

0.82

Correlation Coefficient

Union Pacific  Delta Air

Very poor diversification

The 3 months correlation between Union and Delta is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Union Pacific 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 Union Pacific 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 Union Pacific 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 Union Pacific i.e., Union Pacific and Delta Air go up and down completely randomly.

Pair Corralation between Union Pacific and Delta Air

Considering the 90-day investment horizon Union Pacific is expected to generate 2.29 times less return on investment than Delta Air. But when comparing it to its historical volatility, Union Pacific is 1.84 times less risky than Delta Air. It trades about 0.03 of its potential returns per unit of risk. Delta Air Lines is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,483  in Delta Air Lines on February 8, 2025 and sell it today you would earn a total of  1,047  from holding Delta Air Lines or generate 30.06% return on investment over 90 days.

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

Union Pacific  vs.  Delta Air Lines

Union Pacific

Risk-Adjusted Performance

Very Weak

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

Delta Air Lines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Delta Air Lines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in June 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Union Pacific and Delta Air

The main advantage of trading using opposite Union Pacific and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Pacific 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 Union Pacific 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.

Check out your portfolio center.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.