Correlation Between Delta Air and Controladora Vuela

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

Diversification Opportunities for Delta Air and Controladora Vuela

0.15

Correlation Coefficient

Delta Air  Controladora Vuela

Average diversification

The 3 months correlation between Delta and Controladora is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Controladora Vuela Compaa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Controladora Vuela Compaa 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 Controladora Vuela. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Controladora Vuela Compaa has no effect on the direction of Delta Air i.e., Delta Air and Controladora Vuela go up and down completely randomly.

Pair Corralation between Delta Air and Controladora Vuela

Assuming the 90 days trading horizon Delta Air Lines is expected to generate 0.89 times more return on investment than Controladora Vuela. However, Delta Air Lines is 1.12 times less risky than Controladora Vuela. It trades about 0.15 of its potential returns per unit of risk. Controladora Vuela Compaa is currently generating about -0.01 per unit of risk. If you would invest  79,189  in Delta Air Lines on April 22, 2025 and sell it today you would earn a total of  25,380  from holding Delta Air Lines or generate 32.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Delta Air Lines  vs.  Controladora Vuela Compaa

Delta Air Lines

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Delta Air showed solid returns over the last few months and may actually be approaching a breakup point.

Controladora Vuela Compaa

Risk-Adjusted Performance

Very Weak

Over the last 90 days Controladora Vuela Compaa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Controladora Vuela is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Delta Air and Controladora Vuela

The main advantage of trading using opposite Delta Air and Controladora Vuela positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Controladora Vuela 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 Controladora Vuela will offset losses from the drop in Controladora Vuela's long position.

The idea behind Delta Air Lines and Controladora Vuela Compaa 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.

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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.