Correlation Between Credicorp and Delta Air
Can any of the company-specific risk be diversified away by investing in both Credicorp 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 Credicorp and Delta Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credicorp and Delta Air Lines, you can compare the effects of market volatilities on Credicorp 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 Credicorp with a short position of Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credicorp and Delta Air.
Diversification Opportunities for Credicorp and Delta Air
Very poor diversification
The 3 months correlation between Credicorp and Delta is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Credicorp 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 Credicorp 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 Credicorp 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 Credicorp i.e., Credicorp and Delta Air go up and down completely randomly.
Pair Corralation between Credicorp and Delta Air
Assuming the 90 days trading horizon Credicorp is expected to under-perform the Delta Air. But the stock apears to be less risky and, when comparing its historical volatility, Credicorp is 4.56 times less risky than Delta Air. The stock trades about -0.22 of its potential returns per unit of risk. The Delta Air Lines is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 122,300 in Delta Air Lines on October 20, 2024 and sell it today you would earn a total of 14,229 from holding Delta Air Lines or generate 11.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Credicorp vs. Delta Air Lines
Performance |
| Timeline |
| Credicorp |
| Delta Air Lines |
Credicorp and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credicorp and Delta Air
The main advantage of trading using opposite Credicorp and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credicorp 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.| Credicorp vs. CMR SAB de | Credicorp vs. Emerson Electric Co | Credicorp vs. American Express | Credicorp vs. Tesla Inc |
| Delta Air vs. Grupo Hotelero Santa | Delta Air vs. Capital One Financial | Delta Air vs. McEwen Mining | Delta Air vs. Ameriprise Financial |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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