Correlation Between Delta Air and Citigroup

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

Diversification Opportunities for Delta Air and Citigroup

0.42

Correlation Coefficient

Delta Air  Citigroup

Very weak diversification

The 3 months correlation between Delta and Citigroup is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup 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 Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Delta Air i.e., Delta Air and Citigroup go up and down completely randomly.

Pair Corralation between Delta Air and Citigroup

If you would invest  72,374  in Delta Air Lines on October 12, 2024 and sell it today you would earn a total of  65,926  from holding Delta Air Lines or generate 91.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.0%
Values	Daily Returns

Delta Air Lines  vs.  Citigroup

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.

Citigroup

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Citigroup has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak primary indicators, Citigroup showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delta Air and Citigroup

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

The idea behind Delta Air Lines and Citigroup 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.