Correlation Between Clal Insurance and Delek Automotive

Can any of the company-specific risk be diversified away by investing in both Clal Insurance and Delek Automotive 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 Clal Insurance and Delek Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Clal Insurance Enterprises and Delek Automotive Systems, you can compare the effects of market volatilities on Clal Insurance and Delek Automotive 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 Clal Insurance with a short position of Delek Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clal Insurance and Delek Automotive.

Diversification Opportunities for Clal Insurance and Delek Automotive

0.62

Correlation Coefficient

Clal Insurance  Delek Automotive

Poor diversification

The 3 months correlation between Clal and Delek is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Clal Insurance Enterprises and Delek Automotive Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Automotive Systems and Clal Insurance 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 Clal Insurance Enterprises are associated (or correlated) with Delek Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Automotive Systems has no effect on the direction of Clal Insurance i.e., Clal Insurance and Delek Automotive go up and down completely randomly.

Pair Corralation between Clal Insurance and Delek Automotive

Assuming the 90 days trading horizon Clal Insurance Enterprises is expected to generate 1.04 times more return on investment than Delek Automotive. However, Clal Insurance is 1.04 times more volatile than Delek Automotive Systems. It trades about 0.1 of its potential returns per unit of risk. Delek Automotive Systems is currently generating about -0.05 per unit of risk. If you would invest  834,700  in Clal Insurance Enterprises on December 30, 2024 and sell it today you would earn a total of  93,800  from holding Clal Insurance Enterprises or generate 11.24% return on investment over 90 days.

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

Clal Insurance Enterprises  vs.  Delek Automotive Systems

Clal Insurance Enter

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Clal Insurance Enterprises are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Clal Insurance sustained solid returns over the last few months and may actually be approaching a breakup point.

Delek Automotive Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Delek Automotive Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Clal Insurance and Delek Automotive

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

The idea behind Clal Insurance Enterprises and Delek Automotive Systems 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.