Correlation Between Delta Air and Gol Linhas
Can any of the company-specific risk be diversified away by investing in both Delta Air and Gol Linhas 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 Gol Linhas 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 Gol Linhas Aereas, you can compare the effects of market volatilities on Delta Air and Gol Linhas 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 Gol Linhas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Gol Linhas.
Diversification Opportunities for Delta Air and Gol Linhas
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Delta and Gol is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Gol Linhas Aereas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gol Linhas Aereas 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 Gol Linhas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gol Linhas Aereas has no effect on the direction of Delta Air i.e., Delta Air and Gol Linhas go up and down completely randomly.
Pair Corralation between Delta Air and Gol Linhas
Considering the 90-day investment horizon Delta Air Lines is expected to generate 0.09 times more return on investment than Gol Linhas. However, Delta Air Lines is 11.08 times less risky than Gol Linhas. It trades about 0.23 of its potential returns per unit of risk. Gol Linhas Aereas is currently generating about -0.57 per unit of risk. If you would invest 4,008 in Delta Air Lines on January 25, 2024 and sell it today you would earn a total of 915.00 from holding Delta Air Lines or generate 22.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 12.7% |
| Values | Daily Returns |
Delta Air Lines vs. Gol Linhas Aereas
Performance |
| Timeline |
| Delta Air Lines |
| Gol Linhas Aereas |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Delta Air and Gol Linhas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Gol Linhas
The main advantage of trading using opposite Delta Air and Gol Linhas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Gol Linhas 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 Gol Linhas will offset losses from the drop in Gol Linhas' long position.| Delta Air vs. American Airlines Group | Delta Air vs. Southwest Airlines | Delta Air vs. JetBlue Airways Corp | Delta Air vs. Spirit Airlines |
| Gol Linhas vs. Azul SA | Gol Linhas vs. Air France KLM | Gol Linhas vs. Copa Holdings SA | Gol Linhas vs. International Consolidated Airlines |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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