Correlation Between Delta Air and Constellation Brands
Can any of the company-specific risk be diversified away by investing in both Delta Air and Constellation Brands 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 Constellation Brands 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 Constellation Brands Class, you can compare the effects of market volatilities on Delta Air and Constellation Brands 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 Constellation Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Constellation Brands.
Diversification Opportunities for Delta Air and Constellation Brands
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Delta and Constellation is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Constellation Brands Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellation Brands 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 Constellation Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellation Brands has no effect on the direction of Delta Air i.e., Delta Air and Constellation Brands go up and down completely randomly.
Pair Corralation between Delta Air and Constellation Brands
Considering the 90-day investment horizon Delta Air Lines is expected to generate 0.92 times more return on investment than Constellation Brands. However, Delta Air Lines is 1.09 times less risky than Constellation Brands. It trades about 0.17 of its potential returns per unit of risk. Constellation Brands Class is currently generating about -0.16 per unit of risk. If you would invest 5,477 in Delta Air Lines on October 24, 2024 and sell it today you would earn a total of 1,357 from holding Delta Air Lines or generate 24.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. Constellation Brands Class
Performance |
| Timeline |
| Delta Air Lines |
| Constellation Brands |
Delta Air and Constellation Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Constellation Brands
The main advantage of trading using opposite Delta Air and Constellation Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Constellation Brands 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 Constellation Brands will offset losses from the drop in Constellation Brands' long position.| Delta Air vs. American Airlines Group | Delta Air vs. Southwest Airlines | Delta Air vs. JetBlue Airways Corp | Delta Air vs. United Airlines Holdings |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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