Correlation Between Delta Air and Azul SA
Can any of the company-specific risk be diversified away by investing in both Delta Air and Azul SA 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 Azul SA 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 Azul SA, you can compare the effects of market volatilities on Delta Air and Azul SA 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 Azul SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Azul SA.
Diversification Opportunities for Delta Air and Azul SA
Good diversification
The 3 months correlation between Delta and Azul is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Azul SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azul SA 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 Azul SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azul SA has no effect on the direction of Delta Air i.e., Delta Air and Azul SA go up and down completely randomly.
Pair Corralation between Delta Air and Azul SA
Considering the 90-day investment horizon Delta Air Lines is expected to generate 0.64 times more return on investment than Azul SA. However, Delta Air Lines is 1.55 times less risky than Azul SA. It trades about 0.18 of its potential returns per unit of risk. Azul SA is currently generating about -0.16 per unit of risk. If you would invest 5,846 in Delta Air Lines on August 31, 2024 and sell it today you would earn a total of 516.00 from holding Delta Air Lines or generate 8.83% 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. Azul SA
Performance |
| Timeline |
| Delta Air Lines |
| Azul SA |
Delta Air and Azul SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Azul SA
The main advantage of trading using opposite Delta Air and Azul SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Azul SA 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 Azul SA will offset losses from the drop in Azul SA's long position.| Delta Air vs. JetBlue Airways Corp | Delta Air vs. Allegiant Travel | Delta Air vs. SkyWest | Delta Air vs. Air Transport Services |
| Azul SA vs. JetBlue Airways Corp | Azul SA vs. Allegiant Travel | Azul SA vs. SkyWest | Azul SA vs. Air Transport Services |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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