Correlation Between International Consolidated and Delta Air
Can any of the company-specific risk be diversified away by investing in both International Consolidated 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 International Consolidated and Delta Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Consolidated Airlines and Delta Air Lines, you can compare the effects of market volatilities on International Consolidated 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 International Consolidated with a short position of Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Delta Air.
Diversification Opportunities for International Consolidated and Delta Air
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between International and Delta is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air 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 International Consolidated 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 International Consolidated Airlines 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 International Consolidated i.e., International Consolidated and Delta Air go up and down completely randomly.
Pair Corralation between International Consolidated and Delta Air
Assuming the 90 days horizon International Consolidated Airlines is expected to generate 1.33 times more return on investment than Delta Air. However, International Consolidated is 1.33 times more volatile than Delta Air Lines. It trades about 0.13 of its potential returns per unit of risk. Delta Air Lines is currently generating about 0.12 per unit of risk. If you would invest 412.00 in International Consolidated Airlines on January 26, 2024 and sell it today you would earn a total of 25.00 from holding International Consolidated Airlines or generate 6.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Consolidated Air vs. Delta Air Lines
Performance |
| Timeline |
| International Consolidated |
| Delta Air Lines |
International Consolidated and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and Delta Air
The main advantage of trading using opposite International Consolidated and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated 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.| International Consolidated vs. Vertical Aerospace | International Consolidated vs. Rolls Royce Holdings plc | International Consolidated vs. Embraer SA ADR | International Consolidated vs. Rocket Lab USA |
| Delta Air vs. American Airlines Group | Delta Air vs. Southwest Airlines | Delta Air vs. JetBlue Airways Corp | Delta Air vs. Spirit Airlines |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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