Correlation Between Delta Air and Grupo Aeroportuario

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

Diversification Opportunities for Delta Air and Grupo Aeroportuario

-0.04

Correlation Coefficient

Delta Air  Grupo Aeroportuario

Good diversification

The 3 months correlation between Delta and Grupo is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Grupo Aeroportuario del in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aeroportuario del 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 Grupo Aeroportuario. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aeroportuario del has no effect on the direction of Delta Air i.e., Delta Air and Grupo Aeroportuario go up and down completely randomly.

Pair Corralation between Delta Air and Grupo Aeroportuario

Assuming the 90 days horizon Delta Air Lines is expected to generate 1.08 times more return on investment than Grupo Aeroportuario. However, Delta Air is 1.08 times more volatile than Grupo Aeroportuario del. It trades about 0.05 of its potential returns per unit of risk. Grupo Aeroportuario del is currently generating about -0.05 per unit of risk. If you would invest  4,926  in Delta Air Lines on October 9, 2024 and sell it today you would earn a total of  746.00  from holding Delta Air Lines or generate 15.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Delta Air Lines  vs.  Grupo Aeroportuario del

Delta Air Lines

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Delta Air reported solid returns over the last few months and may actually be approaching a breakup point.

Grupo Aeroportuario del

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Aeroportuario del has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Grupo Aeroportuario 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 Grupo Aeroportuario

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

The idea behind Delta Air Lines and Grupo Aeroportuario del 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.