Delta Air Lines Standard Deviation

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Delta Air Lines is a major American airline, with its headquarters at Atlanta Hartsfield-Jackson International Airport in Georgia (Unknown, Stats). The airline operates over 5,400 flights a day and serves a widespread domestic and international network including 333 destinations in 64 countries on 6 continents (Unknown, stats). In addition to 10 domestic hubs, Delta operates three international hubs, is one of the founding members of the SkyTeam Alliance, and participates in joint ventures with other airlines (Unknown, Stats). With such a massive domestic and overseas empire it is easy to focus on profits, but by analyzing the stock’s holding period return, standard deviation, and beta it is easy to see just how safe it would be to invest in…show more content…
Standard deviation by definition is a measure of variability which is used as the standard measure of the total risk of individual assets and portfolios of assets (Unknown, Mean). To simplify, it is a measure of the likelihood that the stock will move either positively or negatively. For example, the standard deviation calculated for Delta Air Lines is 10.24% which shows how risky the stock can be for the investor. Ergo, standard deviation also allows the company to see how high of a return the investor should be earning. If the standard deviation is higher, then the return must be higher as well, because it’s a riskier stock. On the other hand, the S&P 500’s standard deviation is 3.76% making the return lower than Delta’s. Therefore, this determines that Delta’s stock is riskier but has a higher…show more content…
Beta is used to measure the relationship between a stock’s returns and the market’s returns. It measures the volatility or risk of a stock compared to the market as a whole and can predict the tendency of a security's returns to respond to swings in the market (Unknown, Beta). When a beta is equal to 1, it predicts that the price of the stock will move with that of the market. Whereas a beta of more than 1 indicates that the stock price will be more volatile than the market, a beta that is less than 1 is less volatile. Furthermore, the calculated beta for Delta Air Lines is 0.84, which means the stock is less volatile than the market. However, the published beta is 0.77. Differences in the analyzed time periods create the variation since the calculated beta looks at 60 months whereas the published beta covers 52 weeks. Consequently, this can cause the beta calculations to be slightly off, but they are still around the same
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