Correlation Between Delta Air and Nordon Indstrias

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

Diversification Opportunities for Delta Air and Nordon Indstrias

-0.87

Correlation Coefficient

Delta Air  Nordon Indstrias

Pay attention - limited upside

The 3 months correlation between Delta and Nordon is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Nordon Indstrias Metalrgicas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordon Indstrias Met 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 Nordon Indstrias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordon Indstrias Met has no effect on the direction of Delta Air i.e., Delta Air and Nordon Indstrias go up and down completely randomly.

Pair Corralation between Delta Air and Nordon Indstrias

Assuming the 90 days trading horizon Delta Air is expected to generate 2.43 times less return on investment than Nordon Indstrias. But when comparing it to its historical volatility, Delta Air Lines is 5.39 times less risky than Nordon Indstrias. It trades about 0.14 of its potential returns per unit of risk. Nordon Indstrias Metalrgicas is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  375.00  in Nordon Indstrias Metalrgicas on September 28, 2024 and sell it today you would earn a total of  225.00  from holding Nordon Indstrias Metalrgicas or generate 60.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	93.66%
Values	Daily Returns

Delta Air Lines  vs.  Nordon Indstrias Metalrgicas

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 somewhat weak basic indicators, Delta Air sustained solid returns over the last few months and may actually be approaching a breakup point.

Nordon Indstrias Met

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordon Indstrias Metalrgicas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Delta Air and Nordon Indstrias

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

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