Correlation Between Delta Air and Qantas Airways

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Can any of the company-specific risk be diversified away by investing in both Delta Air and Qantas Airways 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 Qantas Airways 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 Qantas Airways ADR, you can compare the effects of market volatilities on Delta Air and Qantas Airways 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 Qantas Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Qantas Airways.

Diversification Opportunities for Delta Air and Qantas Airways

0.92
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Delta and Qantas is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Qantas Airways ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qantas Airways ADR 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 Qantas Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qantas Airways ADR has no effect on the direction of Delta Air i.e., Delta Air and Qantas Airways go up and down completely randomly.

Pair Corralation between Delta Air and Qantas Airways

Considering the 90-day investment horizon Delta Air Lines is expected to generate 0.78 times more return on investment than Qantas Airways. However, Delta Air Lines is 1.28 times less risky than Qantas Airways. It trades about 0.33 of its potential returns per unit of risk. Qantas Airways ADR is currently generating about 0.16 per unit of risk. If you would invest  2,970  in Delta Air Lines on May 14, 2022 and sell it today you would earn a total of  480.00  from holding Delta Air Lines or generate 16.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Delta Air Lines  vs.  Qantas Airways ADR

 Performance (%) 
       Timeline  
Delta Air Lines 
Delta Performance
0 of 100
Over the last 90 days Delta Air Lines has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest sluggish performance, the Stock's basic indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Delta Price Channel

Qantas Airways ADR 
Qantas Performance
0 of 100
Over the last 90 days Qantas Airways ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest sluggish performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Qantas Price Channel

Delta Air and Qantas Airways Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Delta Air and Qantas Airways

The main advantage of trading using opposite Delta Air and Qantas Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Qantas Airways 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 Qantas Airways will offset losses from the drop in Qantas Airways' long position.
The idea behind Delta Air Lines and Qantas Airways ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Qantas Airways ADR

Pair trading matchups for Qantas Airways

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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