Correlation Between Delta Air and La Comer

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Can any of the company-specific risk be diversified away by investing in both Delta Air and La Comer 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 La Comer 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 La Comer SAB, you can compare the effects of market volatilities on Delta Air and La Comer 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 La Comer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and La Comer.

Diversification Opportunities for Delta Air and La Comer

-0.53
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Delta and LACOMERUBC is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and La Comer SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La Comer SAB 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 La Comer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La Comer SAB has no effect on the direction of Delta Air i.e., Delta Air and La Comer go up and down completely randomly.

Pair Corralation between Delta Air and La Comer

Assuming the 90 days trading horizon Delta Air Lines is expected to generate 1.57 times more return on investment than La Comer. However, Delta Air is 1.57 times more volatile than La Comer SAB. It trades about 0.3 of its potential returns per unit of risk. La Comer SAB is currently generating about 0.09 per unit of risk. If you would invest  121,500  in Delta Air Lines on November 2, 2024 and sell it today you would earn a total of  19,900  from holding Delta Air Lines or generate 16.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Delta Air Lines  vs.  La Comer SAB

 Performance 
       Timeline  
Delta Air Lines 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Delta Air showed solid returns over the last few months and may actually be approaching a breakup point.
La Comer SAB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days La Comer SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Delta Air and La Comer Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Delta Air and La Comer

The main advantage of trading using opposite Delta Air and La Comer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, La Comer 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 La Comer will offset losses from the drop in La Comer's long position.
The idea behind Delta Air Lines and La Comer SAB 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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