Correlation Between Delta Air and Induction Healthcare

Can any of the company-specific risk be diversified away by investing in both Delta Air and Induction 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 Induction 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 Induction Healthcare Group, you can compare the effects of market volatilities on Delta Air and Induction 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 Induction Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Induction Healthcare.

Diversification Opportunities for Delta Air and Induction Healthcare

-0.23

Correlation Coefficient

Delta Air  Induction Healthcare

Very good diversification

The 3 months correlation between Delta and Induction is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Induction Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Induction 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 Induction Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Induction Healthcare has no effect on the direction of Delta Air i.e., Delta Air and Induction Healthcare go up and down completely randomly.

Pair Corralation between Delta Air and Induction Healthcare

Assuming the 90 days trading horizon Delta Air Lines is expected to generate 1.0 times more return on investment than Induction Healthcare. However, Delta Air Lines is 1.0 times less risky than Induction Healthcare. It trades about -0.02 of its potential returns per unit of risk. Induction Healthcare Group is currently generating about -0.2 per unit of risk. If you would invest  6,382  in Delta Air Lines on November 29, 2024 and sell it today you would lose (300.00) from holding Delta Air Lines or give up 4.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Delta Air Lines  vs.  Induction Healthcare Group

Delta Air Lines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Delta Air Lines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Delta Air is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Induction Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Induction Healthcare Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Delta Air and Induction Healthcare

The main advantage of trading using opposite Delta Air and Induction Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Induction 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 Induction Healthcare will offset losses from the drop in Induction Healthcare's long position.

The idea behind Delta Air Lines and Induction Healthcare Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.