Correlation Between Delek Automotive and American Airlines
Can any of the company-specific risk be diversified away by investing in both Delek Automotive and American Airlines 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 Delek Automotive and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delek Automotive Systems and American Airlines Group, you can compare the effects of market volatilities on Delek Automotive and American Airlines 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 Delek Automotive with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek Automotive and American Airlines.
Diversification Opportunities for Delek Automotive and American Airlines
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Delek and American is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Delek Automotive Systems and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Delek Automotive 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 Delek Automotive Systems are associated (or correlated) with American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of Delek Automotive i.e., Delek Automotive and American Airlines go up and down completely randomly.
Pair Corralation between Delek Automotive and American Airlines
Assuming the 90 days trading horizon Delek Automotive is expected to generate 1.17 times less return on investment than American Airlines. In addition to that, Delek Automotive is 1.16 times more volatile than American Airlines Group. It trades about 0.06 of its total potential returns per unit of risk. American Airlines Group is currently generating about 0.09 per unit of volatility. If you would invest 1,092 in American Airlines Group on January 25, 2024 and sell it today you would earn a total of 300.00 from holding American Airlines Group or generate 27.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.49% |
| Values | Daily Returns |
Delek Automotive Systems vs. American Airlines Group
Performance |
| Timeline |
| Delek Automotive Systems |
| American Airlines |
Delek Automotive and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delek Automotive and American Airlines
The main advantage of trading using opposite Delek Automotive and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delek Automotive position performs unexpectedly, American Airlines 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 American Airlines will offset losses from the drop in American Airlines' long position.| Delek Automotive vs. Clal Insurance Enterprises | Delek Automotive vs. Israel Discount Bank | Delek Automotive vs. Bezeq Israeli Telecommunication | Delek Automotive vs. Alony Hetz Properties |
| American Airlines vs. Delta Air Lines | American Airlines vs. Southwest Airlines | American Airlines vs. JetBlue Airways Corp | American Airlines vs. Spirit 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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