Correlation Between Delta Air and Ferrovial

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

Diversification Opportunities for Delta Air and Ferrovial

0.88

Correlation Coefficient

Delta Air  Ferrovial

Very poor diversification

The 3 months correlation between Delta and Ferrovial is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Ferrovial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrovial 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 Ferrovial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrovial has no effect on the direction of Delta Air i.e., Delta Air and Ferrovial go up and down completely randomly.

Pair Corralation between Delta Air and Ferrovial

If you would invest  4,519  in Delta Air Lines on September 14, 2024 and sell it today you would earn a total of  1,641  from holding Delta Air Lines or generate 36.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.56%
Values	Daily Returns

Delta Air Lines  vs.  Ferrovial

Delta Air Lines

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, Delta Air disclosed solid returns over the last few months and may actually be approaching a breakup point.

Ferrovial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ferrovial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ferrovial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Delta Air and Ferrovial

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

The idea behind Delta Air Lines and Ferrovial 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 Stocks Directory module to find actively traded stocks across global markets.