Correlation Between Dan Hotels and Delek

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Can any of the company-specific risk be diversified away by investing in both Dan Hotels and Delek 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 Dan Hotels and Delek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dan Hotels and Delek Group, you can compare the effects of market volatilities on Dan Hotels and Delek 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 Dan Hotels with a short position of Delek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dan Hotels and Delek.

Diversification Opportunities for Dan Hotels and Delek

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between Dan and Delek is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Dan Hotels and Delek Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Group and Dan Hotels 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 Dan Hotels are associated (or correlated) with Delek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Group has no effect on the direction of Dan Hotels i.e., Dan Hotels and Delek go up and down completely randomly.

Pair Corralation between Dan Hotels and Delek

Assuming the 90 days trading horizon Dan Hotels is expected to generate 12.47 times less return on investment than Delek. But when comparing it to its historical volatility, Dan Hotels is 1.09 times less risky than Delek. It trades about 0.02 of its potential returns per unit of risk. Delek Group is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  3,887,550  in Delek Group on September 12, 2024 and sell it today you would earn a total of  879,450  from holding Delek Group or generate 22.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Dan Hotels  vs.  Delek Group

 Performance 
       Timeline  
Dan Hotels 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Dan Hotels are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Dan Hotels is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Delek Group 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Delek Group are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Delek unveiled solid returns over the last few months and may actually be approaching a breakup point.

Dan Hotels and Delek Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dan Hotels and Delek

The main advantage of trading using opposite Dan Hotels and Delek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dan Hotels position performs unexpectedly, Delek 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 will offset losses from the drop in Delek's long position.
The idea behind Dan Hotels and Delek 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 Stocks Directory module to find actively traded stocks across global markets.

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