Correlation Between Delta Air and National Health
Can any of the company-specific risk be diversified away by investing in both Delta Air and National Health 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 National Health 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 National Health Investors, you can compare the effects of market volatilities on Delta Air and National Health 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 National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and National Health.
Diversification Opportunities for Delta Air and National Health
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Delta and National is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and National Health Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Health Investors 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 National Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Health Investors has no effect on the direction of Delta Air i.e., Delta Air and National Health go up and down completely randomly.
Pair Corralation between Delta Air and National Health
Assuming the 90 days horizon Delta Air Lines is expected to generate 1.41 times more return on investment than National Health. However, Delta Air is 1.41 times more volatile than National Health Investors. It trades about 0.24 of its potential returns per unit of risk. National Health Investors is currently generating about -0.05 per unit of risk. If you would invest 5,739 in Delta Air Lines on November 3, 2024 and sell it today you would earn a total of 815.00 from holding Delta Air Lines or generate 14.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. National Health Investors
Performance |
| Timeline |
| Delta Air Lines |
| National Health Investors |
Delta Air and National Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and National Health
The main advantage of trading using opposite Delta Air and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, National Health 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 National Health will offset losses from the drop in National Health's long position.| Delta Air vs. AIR CHINA LTD | Delta Air vs. RYANAIR HLDGS ADR | Delta Air vs. Southwest Airlines Co | Delta Air vs. Ryanair Holdings plc |
| National Health vs. Insurance Australia Group | National Health vs. CarsalesCom | National Health vs. Zoom Video Communications | National Health vs. UNIVERSAL MUSIC GROUP |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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