Correlation Between Delta Air and American International
Can any of the company-specific risk be diversified away by investing in both Delta Air and American International 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 American International 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 American International Group, you can compare the effects of market volatilities on Delta Air and American International 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 American International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and American International.
Diversification Opportunities for Delta Air and American International
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Delta and American is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and American International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American International 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 American International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American International has no effect on the direction of Delta Air i.e., Delta Air and American International go up and down completely randomly.
Pair Corralation between Delta Air and American International
If you would invest 146,800 in American International Group on November 28, 2024 and sell it today you would earn a total of 0.00 from holding American International Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Delta Air Lines vs. American International Group
Performance |
| Timeline |
| Delta Air Lines |
| American International |
Delta Air and American International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and American International
The main advantage of trading using opposite Delta Air and American International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, American International 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 American International will offset losses from the drop in American International's long position.| Delta Air vs. Grupo Sports World | Delta Air vs. Applied Materials | Delta Air vs. Steel Dynamics | Delta Air vs. Grupo Hotelero Santa |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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