Correlation Between Delta Air and Z Holdings

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

Diversification Opportunities for Delta Air and Z Holdings

-0.87

Correlation Coefficient

Delta Air  Z Holdings

Pay attention - limited upside

The 3 months correlation between Delta and YAHOY is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Z Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Z Holdings Corp 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 Z Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Z Holdings Corp has no effect on the direction of Delta Air i.e., Delta Air and Z Holdings go up and down completely randomly.

Pair Corralation between Delta Air and Z Holdings

Considering the 90-day investment horizon Delta Air Lines is expected to generate 0.94 times more return on investment than Z Holdings. However, Delta Air Lines is 1.07 times less risky than Z Holdings. It trades about 0.24 of its potential returns per unit of risk. Z Holdings Corp is currently generating about -0.07 per unit of risk. If you would invest  4,657  in Delta Air Lines on February 3, 2024 and sell it today you would earn a total of  446.00  from holding Delta Air Lines or generate 9.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Delta Air Lines  vs.  Z Holdings Corp

Delta Air Lines

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Delta Air disclosed solid returns over the last few months and may actually be approaching a breakup point.

Z Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Z Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Delta Air and Z Holdings

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

The idea behind Delta Air Lines and Z Holdings Corp 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.