Correlation Between Delta Air and Transurban

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

Diversification Opportunities for Delta Air and Transurban

0.51

Correlation Coefficient

Delta Air  Transurban

Very weak diversification

The 3 months correlation between Delta and Transurban is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Transurban Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transurban Group 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 Transurban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transurban Group has no effect on the direction of Delta Air i.e., Delta Air and Transurban go up and down completely randomly.

Pair Corralation between Delta Air and Transurban

Considering the 90-day investment horizon Delta Air Lines is expected to under-perform the Transurban. But the stock apears to be less risky and, when comparing its historical volatility, Delta Air Lines is 1.35 times less risky than Transurban. The stock trades about -0.14 of its potential returns per unit of risk. The Transurban Group is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  884.00  in Transurban Group on December 21, 2024 and sell it today you would lose (98.00) from holding Transurban Group or give up 11.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.53%
Values	Daily Returns

Delta Air Lines  vs.  Transurban Group

Delta Air Lines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Delta Air Lines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Transurban Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transurban Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Delta Air and Transurban

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

The idea behind Delta Air Lines and Transurban Group 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.