Correlation Between Delta Air and Grupo Industrial

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

Diversification Opportunities for Delta Air and Grupo Industrial

-0.58

Correlation Coefficient

Delta Air  Grupo Industrial

Excellent diversification

The 3 months correlation between Delta and Grupo is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Grupo Industrial Saltillo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Industrial Saltillo 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 Grupo Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Industrial Saltillo has no effect on the direction of Delta Air i.e., Delta Air and Grupo Industrial go up and down completely randomly.

Pair Corralation between Delta Air and Grupo Industrial

Assuming the 90 days trading horizon Delta Air Lines is expected to under-perform the Grupo Industrial. In addition to that, Delta Air is 1.3 times more volatile than Grupo Industrial Saltillo. It trades about -0.07 of its total potential returns per unit of risk. Grupo Industrial Saltillo is currently generating about 0.13 per unit of volatility. If you would invest  1,706  in Grupo Industrial Saltillo on October 11, 2024 and sell it today you would earn a total of  42.00  from holding Grupo Industrial Saltillo or generate 2.46% return on investment over 90 days.

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

Delta Air Lines  vs.  Grupo Industrial Saltillo

Delta Air Lines

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 14 (%) 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.

Grupo Industrial Saltillo

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Delta Air and Grupo Industrial

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

The idea behind Delta Air Lines and Grupo Industrial Saltillo 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 Transaction History module to view history of all your transactions and understand their impact on performance.