Correlation Between Delta Air and Grupo Cementos

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

Diversification Opportunities for Delta Air and Grupo Cementos

0.86

Correlation Coefficient

Delta Air  Grupo Cementos

Very poor diversification

The 3 months correlation between Delta and Grupo is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Grupo Cementos de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Cementos de 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 Cementos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Cementos de has no effect on the direction of Delta Air i.e., Delta Air and Grupo Cementos go up and down completely randomly.

Pair Corralation between Delta Air and Grupo Cementos

Assuming the 90 days trading horizon Delta Air Lines is expected to generate 1.15 times more return on investment than Grupo Cementos. However, Delta Air is 1.15 times more volatile than Grupo Cementos de. It trades about 0.16 of its potential returns per unit of risk. Grupo Cementos de is currently generating about 0.17 per unit of risk. If you would invest  100,900  in Delta Air Lines on September 27, 2024 and sell it today you would earn a total of  25,666  from holding Delta Air Lines or generate 25.44% return on investment over 90 days.

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

Delta Air Lines  vs.  Grupo Cementos de

Delta Air Lines

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Delta Air showed solid returns over the last few months and may actually be approaching a breakup point.

Grupo Cementos de

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Cementos de are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Grupo Cementos showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delta Air and Grupo Cementos

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

The idea behind Delta Air Lines and Grupo Cementos de 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.