Correlation Between CVS Health and Delta Air
Can any of the company-specific risk be diversified away by investing in both CVS Health and Delta Air 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 CVS Health and Delta Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and Delta Air Lines, you can compare the effects of market volatilities on CVS Health and Delta Air 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 CVS Health with a short position of Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Delta Air.
Diversification Opportunities for CVS Health and Delta Air
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between CVS and Delta is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and Delta Air Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Air Lines and CVS Health 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 CVS Health are associated (or correlated) with Delta Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Air Lines has no effect on the direction of CVS Health i.e., CVS Health and Delta Air go up and down completely randomly.
Pair Corralation between CVS Health and Delta Air
Assuming the 90 days trading horizon CVS Health is expected to generate 1.15 times less return on investment than Delta Air. In addition to that, CVS Health is 1.33 times more volatile than Delta Air Lines. It trades about 0.13 of its total potential returns per unit of risk. Delta Air Lines is currently generating about 0.19 per unit of volatility. If you would invest 118,404 in Delta Air Lines on August 31, 2024 and sell it today you would earn a total of 12,096 from holding Delta Air Lines or generate 10.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health vs. Delta Air Lines
Performance |
| Timeline |
| CVS Health |
| Delta Air Lines |
CVS Health and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Delta Air
The main advantage of trading using opposite CVS Health and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Delta Air 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 Delta Air will offset losses from the drop in Delta Air's long position.| CVS Health vs. The Select Sector | CVS Health vs. Promotora y Operadora | CVS Health vs. SPDR Series Trust | CVS Health vs. iShares Trust |
| Delta Air vs. McEwen Mining | Delta Air vs. CVS Health | Delta Air vs. DXC Technology | Delta Air vs. Martin Marietta Materials |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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