Correlation Between Gol Linhas and Delta Air

Can any of the company-specific risk be diversified away by investing in both Gol Linhas and Delta Air 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 Gol Linhas and Delta Air into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gol Linhas Areas and Delta Air Lines, you can compare the effects of market volatilities on Gol Linhas and Delta Air 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 Gol Linhas with a short position of Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gol Linhas and Delta Air.

Diversification Opportunities for Gol Linhas and Delta Air

0.55

Correlation Coefficient

Gol Linhas  Delta Air

Very weak diversification

The 3 months correlation between Gol and Delta is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Gol Linhas Areas and Delta Air Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Air Lines and Gol Linhas 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 Gol Linhas Areas are associated (or correlated) with Delta Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Air Lines has no effect on the direction of Gol Linhas i.e., Gol Linhas and Delta Air go up and down completely randomly.

Pair Corralation between Gol Linhas and Delta Air

Assuming the 90 days trading horizon Gol Linhas Areas is expected to generate 1.11 times more return on investment than Delta Air. However, Gol Linhas is 1.11 times more volatile than Delta Air Lines. It trades about 0.05 of its potential returns per unit of risk. Delta Air Lines is currently generating about -0.17 per unit of risk. If you would invest  130.00  in Gol Linhas Areas on December 30, 2024 and sell it today you would earn a total of  10.00  from holding Gol Linhas Areas or generate 7.69% return on investment over 90 days.

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

Gol Linhas Areas  vs.  Delta Air Lines

Gol Linhas Areas

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gol Linhas Areas are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Gol Linhas may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Gol Linhas and Delta Air

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

The idea behind Gol Linhas Areas and Delta Air Lines 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.