Correlation Between Cebu Air and Delta Air
Can any of the company-specific risk be diversified away by investing in both Cebu Air 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 Cebu Air and Delta Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cebu Air ADR and Delta Air Lines, you can compare the effects of market volatilities on Cebu Air 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 Cebu Air with a short position of Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cebu Air and Delta Air.
Diversification Opportunities for Cebu Air and Delta Air
Pay attention - limited upside
The 3 months correlation between Cebu and Delta is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air ADR 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 Cebu 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 Cebu Air ADR 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 Cebu Air i.e., Cebu Air and Delta Air go up and down completely randomly.
Pair Corralation between Cebu Air and Delta Air
Assuming the 90 days horizon Cebu Air ADR is expected to under-perform the Delta Air. In addition to that, Cebu Air is 1.64 times more volatile than Delta Air Lines. It trades about -0.02 of its total potential returns per unit of risk. Delta Air Lines is currently generating about 0.08 per unit of volatility. If you would invest 3,286 in Delta Air Lines on September 3, 2024 and sell it today you would earn a total of 3,096 from holding Delta Air Lines or generate 94.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Cebu Air ADR vs. Delta Air Lines
Performance |
| Timeline |
| Cebu Air ADR |
| Delta Air Lines |
Cebu Air and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cebu Air and Delta Air
The main advantage of trading using opposite Cebu Air and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cebu Air 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.| Cebu Air vs. Finnair Oyj | Cebu Air vs. easyJet plc | Cebu Air vs. Norse Atlantic ASA | Cebu Air vs. Air New Zealand |
| Delta Air vs. Copa Holdings SA | Delta Air vs. SkyWest | Delta Air vs. Air Transport Services | Delta Air vs. Mesa Air Group |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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