Correlation Between ANA Holdings and Delta Air

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

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

Diversification Opportunities for ANA Holdings and Delta Air

-0.66

Correlation Coefficient

ANA Holdings  Delta Air

Excellent diversification

The 3 months correlation between ANA and Delta is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding ANA Holdings ADR 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 ANA Holdings 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 ANA Holdings ADR 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 ANA Holdings i.e., ANA Holdings and Delta Air go up and down completely randomly.

Pair Corralation between ANA Holdings and Delta Air

Assuming the 90 days horizon ANA Holdings is expected to generate 363.0 times less return on investment than Delta Air. In addition to that, ANA Holdings is 1.14 times more volatile than Delta Air Lines. It trades about 0.0 of its total potential returns per unit of risk. Delta Air Lines is currently generating about 0.07 per unit of volatility. If you would invest  3,423  in Delta Air Lines on September 2, 2024 and sell it today you would earn a total of  2,959  from holding Delta Air Lines or generate 86.44% return on investment over 90 days.

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

ANA Holdings ADR  vs.  Delta Air Lines

ANA Holdings ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANA Holdings ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, ANA Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Delta Air Lines

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Delta Air disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ANA Holdings and Delta Air

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

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..