Correlation Between Delta Air and Bolsa Mexicana

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

Diversification Opportunities for Delta Air and Bolsa Mexicana

0.33

Correlation Coefficient

Delta Air  Bolsa Mexicana

Weak diversification

The 3 months correlation between Delta and Bolsa is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Bolsa Mexicana de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bolsa Mexicana de 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 Bolsa Mexicana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bolsa Mexicana de has no effect on the direction of Delta Air i.e., Delta Air and Bolsa Mexicana go up and down completely randomly.

Pair Corralation between Delta Air and Bolsa Mexicana

Assuming the 90 days trading horizon Delta Air Lines is expected to generate 0.71 times more return on investment than Bolsa Mexicana. However, Delta Air Lines is 1.41 times less risky than Bolsa Mexicana. It trades about -0.04 of its potential returns per unit of risk. Bolsa Mexicana de is currently generating about -0.19 per unit of risk. If you would invest  127,377  in Delta Air Lines on October 12, 2024 and sell it today you would lose (1,489) from holding Delta Air Lines or give up 1.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Delta Air Lines  vs.  Bolsa Mexicana de

Delta Air Lines

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Delta Air showed solid returns over the last few months and may actually be approaching a breakup point.

Bolsa Mexicana de

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Bolsa Mexicana de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Bolsa Mexicana is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Delta Air and Bolsa Mexicana

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

The idea behind Delta Air Lines and Bolsa Mexicana de 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.