Correlation Between Delta Air and Petrleo Brasileiro
Can any of the company-specific risk be diversified away by investing in both Delta Air and Petrleo Brasileiro 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 Petrleo Brasileiro 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 Petrleo Brasileiro SA, you can compare the effects of market volatilities on Delta Air and Petrleo Brasileiro 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 Petrleo Brasileiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Petrleo Brasileiro.
Diversification Opportunities for Delta Air and Petrleo Brasileiro
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Delta and Petrleo is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Petrleo Brasileiro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrleo Brasileiro 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 Petrleo Brasileiro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrleo Brasileiro has no effect on the direction of Delta Air i.e., Delta Air and Petrleo Brasileiro go up and down completely randomly.
Pair Corralation between Delta Air and Petrleo Brasileiro
Assuming the 90 days trading horizon Delta Air Lines is expected to generate 1.33 times more return on investment than Petrleo Brasileiro. However, Delta Air is 1.33 times more volatile than Petrleo Brasileiro SA. It trades about 0.19 of its potential returns per unit of risk. Petrleo Brasileiro SA is currently generating about 0.21 per unit of risk. If you would invest 118,404 in Delta Air Lines on August 31, 2024 and sell it today you would earn a total of 12,096 from holding Delta Air Lines or generate 10.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. Petrleo Brasileiro SA
Performance |
| Timeline |
| Delta Air Lines |
| Petrleo Brasileiro |
Delta Air and Petrleo Brasileiro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Petrleo Brasileiro
The main advantage of trading using opposite Delta Air and Petrleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Petrleo Brasileiro 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 Petrleo Brasileiro will offset losses from the drop in Petrleo Brasileiro's long position.| Delta Air vs. McEwen Mining | Delta Air vs. CVS Health | Delta Air vs. DXC Technology | Delta Air vs. Martin Marietta Materials |
| Petrleo Brasileiro vs. Micron Technology | Petrleo Brasileiro vs. Lloyds Banking Group | Petrleo Brasileiro vs. United States Steel | Petrleo Brasileiro vs. The Bank of |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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