Correlation Between Delta Air and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both Delta Air and UnitedHealth Group 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 UnitedHealth Group 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 UnitedHealth Group Incorporated, you can compare the effects of market volatilities on Delta Air and UnitedHealth Group 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 UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and UnitedHealth Group.
Diversification Opportunities for Delta Air and UnitedHealth Group
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Delta and UnitedHealth is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group 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 UnitedHealth Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UnitedHealth Group has no effect on the direction of Delta Air i.e., Delta Air and UnitedHealth Group go up and down completely randomly.
Pair Corralation between Delta Air and UnitedHealth Group
Assuming the 90 days trading horizon Delta Air Lines is expected to generate 1.27 times more return on investment than UnitedHealth Group. However, Delta Air is 1.27 times more volatile than UnitedHealth Group Incorporated. It trades about 0.31 of its potential returns per unit of risk. UnitedHealth Group Incorporated is currently generating about 0.2 per unit of risk. If you would invest 121,512 in Delta Air Lines on November 7, 2024 and sell it today you would earn a total of 19,888 from holding Delta Air Lines or generate 16.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Delta Air Lines vs. UnitedHealth Group Incorporate
Performance |
| Timeline |
| Delta Air Lines |
| UnitedHealth Group |
Delta Air and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and UnitedHealth Group
The main advantage of trading using opposite Delta Air and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, UnitedHealth Group 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 UnitedHealth Group will offset losses from the drop in UnitedHealth Group's long position.| Delta Air vs. The Bank of | Delta Air vs. Hoteles City Express | Delta Air vs. Genworth Financial | Delta Air vs. Air Transport Services |
| UnitedHealth Group vs. KB Home | UnitedHealth Group vs. McEwen Mining | UnitedHealth Group vs. Steel Dynamics | UnitedHealth Group vs. United States Steel |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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