Correlation Between Delta Air and HCA Healthcare
Can any of the company-specific risk be diversified away by investing in both Delta Air and HCA Healthcare 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 HCA Healthcare 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 HCA Healthcare, you can compare the effects of market volatilities on Delta Air and HCA Healthcare 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 HCA Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and HCA Healthcare.
Diversification Opportunities for Delta Air and HCA Healthcare
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Delta and HCA is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare 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 HCA Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCA Healthcare has no effect on the direction of Delta Air i.e., Delta Air and HCA Healthcare go up and down completely randomly.
Pair Corralation between Delta Air and HCA Healthcare
Assuming the 90 days trading horizon Delta Air Lines is expected to generate 1.26 times more return on investment than HCA Healthcare. However, Delta Air is 1.26 times more volatile than HCA Healthcare. It trades about 0.08 of its potential returns per unit of risk. HCA Healthcare is currently generating about 0.04 per unit of risk. If you would invest 3,928 in Delta Air Lines on September 2, 2024 and sell it today you would earn a total of 2,447 from holding Delta Air Lines or generate 62.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. HCA Healthcare
Performance |
| Timeline |
| Delta Air Lines |
| HCA Healthcare |
Delta Air and HCA Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and HCA Healthcare
The main advantage of trading using opposite Delta Air and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, HCA Healthcare 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 HCA Healthcare will offset losses from the drop in HCA Healthcare's long position.| Delta Air vs. Fidelity National Information | Delta Air vs. L3Harris Technologies | Delta Air vs. Raytheon Technologies Corp | Delta Air vs. International Consolidated Airlines |
| HCA Healthcare vs. Uniper SE | HCA Healthcare vs. Mulberry Group PLC | HCA Healthcare vs. London Security Plc | HCA Healthcare vs. Triad Group PLC |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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