Correlation Between Delta Air and Southern Copper
Can any of the company-specific risk be diversified away by investing in both Delta Air and Southern Copper 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 Southern Copper 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 Southern Copper, you can compare the effects of market volatilities on Delta Air and Southern Copper 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 Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Southern Copper.
Diversification Opportunities for Delta Air and Southern Copper
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Delta and Southern is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper 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 Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper has no effect on the direction of Delta Air i.e., Delta Air and Southern Copper go up and down completely randomly.
Pair Corralation between Delta Air and Southern Copper
Assuming the 90 days trading horizon Delta Air Lines is expected to generate 1.03 times more return on investment than Southern Copper. However, Delta Air is 1.03 times more volatile than Southern Copper. It trades about 0.15 of its potential returns per unit of risk. Southern Copper is currently generating about 0.1 per unit of risk. If you would invest 67,766 in Delta Air Lines on November 3, 2024 and sell it today you would earn a total of 73,634 from holding Delta Air Lines or generate 108.66% 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. Southern Copper
Performance |
| Timeline |
| Delta Air Lines |
| Southern Copper |
Delta Air and Southern Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Southern Copper
The main advantage of trading using opposite Delta Air and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Southern Copper 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 Southern Copper will offset losses from the drop in Southern Copper's long position.| Delta Air vs. Ameriprise Financial | Delta Air vs. First Majestic Silver | Delta Air vs. McEwen Mining | Delta Air vs. Micron Technology |
| Southern Copper vs. Grupo Sports World | Southern Copper vs. Verizon Communications | Southern Copper vs. Cognizant Technology Solutions | Southern Copper vs. Samsung Electronics Co |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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