Correlation Between Delta Air and American Healthcare
Can any of the company-specific risk be diversified away by investing in both Delta Air and American 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 American 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 American Healthcare REIT,, you can compare the effects of market volatilities on Delta Air and American 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 American Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and American Healthcare.
Diversification Opportunities for Delta Air and American Healthcare
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Delta and American is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and American Healthcare REIT, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Healthcare REIT, 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 American Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Healthcare REIT, has no effect on the direction of Delta Air i.e., Delta Air and American Healthcare go up and down completely randomly.
Pair Corralation between Delta Air and American Healthcare
Considering the 90-day investment horizon Delta Air is expected to generate 1.72 times less return on investment than American Healthcare. In addition to that, Delta Air is 1.23 times more volatile than American Healthcare REIT,. It trades about 0.12 of its total potential returns per unit of risk. American Healthcare REIT, is currently generating about 0.25 per unit of volatility. If you would invest 1,265 in American Healthcare REIT, on August 26, 2024 and sell it today you would earn a total of 1,593 from holding American Healthcare REIT, or generate 125.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 81.53% |
| Values | Daily Returns |
Delta Air Lines vs. American Healthcare REIT,
Performance |
| Timeline |
| Delta Air Lines |
| American Healthcare REIT, |
Delta Air and American Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and American Healthcare
The main advantage of trading using opposite Delta Air and American Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, American 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 American Healthcare will offset losses from the drop in American Healthcare's long position.| Delta Air vs. American Airlines Group | Delta Air vs. Southwest Airlines | Delta Air vs. JetBlue Airways Corp | Delta Air vs. Spirit Airlines |
| American Healthcare vs. Aspen Insurance Holdings | American Healthcare vs. Delta Air Lines | American Healthcare vs. Pekin Life Insurance | American Healthcare vs. The Hanover Insurance |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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