Correlation Between INTER CARS and DELTA AIR
Can any of the company-specific risk be diversified away by investing in both INTER CARS 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 INTER CARS and DELTA AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTER CARS SA and DELTA AIR LINES, you can compare the effects of market volatilities on INTER CARS 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 INTER CARS with a short position of DELTA AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTER CARS and DELTA AIR.
Diversification Opportunities for INTER CARS and DELTA AIR
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between INTER and DELTA is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA 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 INTER CARS 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 INTER CARS SA 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 INTER CARS i.e., INTER CARS and DELTA AIR go up and down completely randomly.
Pair Corralation between INTER CARS and DELTA AIR
Assuming the 90 days horizon INTER CARS SA is expected to under-perform the DELTA AIR. But the stock apears to be less risky and, when comparing its historical volatility, INTER CARS SA is 1.2 times less risky than DELTA AIR. The stock trades about -0.01 of its potential returns per unit of risk. The DELTA AIR LINES is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,334 in DELTA AIR LINES on October 1, 2024 and sell it today you would earn a total of 1,636 from holding DELTA AIR LINES or generate 37.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INTER CARS SA vs. DELTA AIR LINES
Performance |
| Timeline |
| INTER CARS SA |
| DELTA AIR LINES |
INTER CARS and DELTA AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTER CARS and DELTA AIR
The main advantage of trading using opposite INTER CARS and DELTA AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTER CARS 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 INTER CARS SA 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.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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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