Correlation Between Delta Air and CSX
Can any of the company-specific risk be diversified away by investing in both Delta Air and CSX 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 CSX 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 CSX Corporation, you can compare the effects of market volatilities on Delta Air and CSX 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 CSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and CSX.
Diversification Opportunities for Delta Air and CSX
Very poor diversification
The 3 months correlation between Delta and CSX is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation 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 CSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX Corporation has no effect on the direction of Delta Air i.e., Delta Air and CSX go up and down completely randomly.
Pair Corralation between Delta Air and CSX
Considering the 90-day investment horizon Delta Air Lines is expected to under-perform the CSX. In addition to that, Delta Air is 2.13 times more volatile than CSX Corporation. It trades about -0.08 of its total potential returns per unit of risk. CSX Corporation is currently generating about 0.15 per unit of volatility. If you would invest 3,110 in CSX Corporation on March 21, 2025 and sell it today you would earn a total of 114.00 from holding CSX Corporation or generate 3.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. CSX Corp.
Performance |
| Timeline |
| Delta Air Lines |
| CSX Corporation |
Delta Air and CSX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and CSX
The main advantage of trading using opposite Delta Air and CSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, CSX 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 CSX will offset losses from the drop in CSX's long position.| Delta Air vs. American Airlines Group | Delta Air vs. Southwest Airlines | Delta Air vs. JetBlue Airways Corp | Delta Air vs. United Airlines Holdings |
| CSX vs. Union Pacific | CSX vs. Canadian National Railway | CSX vs. Canadian Pacific Railway | CSX vs. Westinghouse Air Brake |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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