Correlation Between Delta Air and CARDINAL HEALTH

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

Diversification Opportunities for Delta Air and CARDINAL HEALTH

0.69

Correlation Coefficient

Delta Air  CARDINAL HEALTH

Poor diversification

The 3 months correlation between Delta and CARDINAL is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and CARDINAL HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARDINAL HEALTH 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 CARDINAL HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARDINAL HEALTH has no effect on the direction of Delta Air i.e., Delta Air and CARDINAL HEALTH go up and down completely randomly.

Pair Corralation between Delta Air and CARDINAL HEALTH

Assuming the 90 days horizon Delta Air Lines is expected to generate 2.7 times more return on investment than CARDINAL HEALTH. However, Delta Air is 2.7 times more volatile than CARDINAL HEALTH. It trades about 0.17 of its potential returns per unit of risk. CARDINAL HEALTH is currently generating about 0.25 per unit of risk. If you would invest  3,433  in Delta Air Lines on April 20, 2025 and sell it today you would earn a total of  1,350  from holding Delta Air Lines or generate 39.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Delta Air Lines  vs.  CARDINAL HEALTH

Delta Air Lines

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Delta Air reported solid returns over the last few months and may actually be approaching a breakup point.

CARDINAL HEALTH

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CARDINAL HEALTH are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, CARDINAL HEALTH unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delta Air and CARDINAL HEALTH

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

The idea behind Delta Air Lines and CARDINAL HEALTH 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.