Correlation Between Delta Air and Smart Digital

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

Diversification Opportunities for Delta Air and Smart Digital

0.71

Correlation Coefficient

Delta Air  Smart Digital

Poor diversification

The 3 months correlation between Delta and Smart is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Smart Digital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Digital Group 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 Smart Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Digital Group has no effect on the direction of Delta Air i.e., Delta Air and Smart Digital go up and down completely randomly.

Pair Corralation between Delta Air and Smart Digital

Considering the 90-day investment horizon Delta Air is expected to generate 16.84 times less return on investment than Smart Digital. But when comparing it to its historical volatility, Delta Air Lines is 5.76 times less risky than Smart Digital. It trades about 0.05 of its potential returns per unit of risk. Smart Digital Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  499.00  in Smart Digital Group on May 10, 2025 and sell it today you would earn a total of  407.00  from holding Smart Digital Group or generate 81.56% return on investment over 90 days.

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

Delta Air Lines  vs.  Smart Digital Group

Delta Air Lines

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Delta Air may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Smart Digital Group

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Smart Digital Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Smart Digital displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delta Air and Smart Digital

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

The idea behind Delta Air Lines and Smart Digital 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.