Correlation Between Delta Air and Ameritrans Capital

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

Diversification Opportunities for Delta Air and Ameritrans Capital

-0.13

Correlation Coefficient

Delta Air  Ameritrans Capital

Good diversification

The 3 months correlation between Delta and Ameritrans is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Ameritrans Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameritrans Capital Corp 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 Ameritrans Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameritrans Capital Corp has no effect on the direction of Delta Air i.e., Delta Air and Ameritrans Capital go up and down completely randomly.

Pair Corralation between Delta Air and Ameritrans Capital

Considering the 90-day investment horizon Delta Air Lines is expected to generate 0.08 times more return on investment than Ameritrans Capital. However, Delta Air Lines is 12.98 times less risky than Ameritrans Capital. It trades about -0.1 of its potential returns per unit of risk. Ameritrans Capital Corp is currently generating about -0.22 per unit of risk. If you would invest  6,348  in Delta Air Lines on October 12, 2024 and sell it today you would lose (206.00) from holding Delta Air Lines or give up 3.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Delta Air Lines  vs.  Ameritrans Capital Corp

Delta Air Lines

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 9 (%) 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.

Ameritrans Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ameritrans Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Preferred Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Delta Air and Ameritrans Capital

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

The idea behind Delta Air Lines and Ameritrans Capital Corp 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.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.