Correlation Between Delta Air and Visa
Can any of the company-specific risk be diversified away by investing in both Delta Air and Visa 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 Visa 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 Visa Inc, you can compare the effects of market volatilities on Delta Air and Visa 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 Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Visa.
Diversification Opportunities for Delta Air and Visa
Almost no diversification
The 3 months correlation between Delta and Visa is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Visa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Inc 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 Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Inc has no effect on the direction of Delta Air i.e., Delta Air and Visa go up and down completely randomly.
Pair Corralation between Delta Air and Visa
Assuming the 90 days trading horizon Delta Air Lines is expected to generate 2.7 times more return on investment than Visa. However, Delta Air is 2.7 times more volatile than Visa Inc. It trades about 0.23 of its potential returns per unit of risk. Visa Inc is currently generating about 0.06 per unit of risk. If you would invest 124,200 in Delta Air Lines on October 14, 2024 and sell it today you would earn a total of 14,100 from holding Delta Air Lines or generate 11.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. Visa Inc
Performance |
| Timeline |
| Delta Air Lines |
| Visa Inc |
Delta Air and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Visa
The main advantage of trading using opposite Delta Air and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa's long position.| Delta Air vs. Verizon Communications | Delta Air vs. Taiwan Semiconductor Manufacturing | Delta Air vs. The Bank of | Delta Air vs. Grupo Sports World |
| Visa vs. KB Home | Visa vs. Prudential Financial | Visa vs. Applied Materials | Visa vs. New Oriental Education |
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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