Correlation Between Azul SA and Delta Air
Can any of the company-specific risk be diversified away by investing in both Azul SA 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 Azul SA and Delta Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Azul SA and Delta Air Lines, you can compare the effects of market volatilities on Azul SA 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 Azul SA with a short position of Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azul SA and Delta Air.
Diversification Opportunities for Azul SA and Delta Air
Good diversification
The 3 months correlation between Azul and Delta is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Azul 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 Azul SA 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 Azul 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 Azul SA i.e., Azul SA and Delta Air go up and down completely randomly.
Pair Corralation between Azul SA and Delta Air
Given the investment horizon of 90 days Azul SA is expected to under-perform the Delta Air. In addition to that, Azul SA is 1.55 times more volatile than Delta Air Lines. It trades about -0.16 of its total potential returns per unit of risk. Delta Air Lines is currently generating about 0.18 per unit of volatility. If you would invest 5,846 in Delta Air Lines on August 31, 2024 and sell it today you would earn a total of 516.00 from holding Delta Air Lines or generate 8.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Azul SA vs. Delta Air Lines
Performance |
| Timeline |
| Azul SA |
| Delta Air Lines |
Azul SA and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Azul SA and Delta Air
The main advantage of trading using opposite Azul SA and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Azul SA 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.| Azul SA vs. JetBlue Airways Corp | Azul SA vs. Allegiant Travel | Azul SA vs. SkyWest | Azul SA vs. Air Transport Services |
| Delta Air vs. JetBlue Airways Corp | Delta Air vs. Allegiant Travel | Delta Air vs. SkyWest | Delta Air vs. Air Transport Services |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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