Correlation Between Delek and Admiral Group

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

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

Diversification Opportunities for Delek and Admiral Group

-0.76

Correlation Coefficient

Delek  Admiral Group

Pay attention - limited upside

The 3 months correlation between Delek and Admiral is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Delek Group and Admiral Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Admiral Group PLC and Delek 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 Delek Group are associated (or correlated) with Admiral Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Admiral Group PLC has no effect on the direction of Delek i.e., Delek and Admiral Group go up and down completely randomly.

Pair Corralation between Delek and Admiral Group

Assuming the 90 days horizon Delek Group is expected to generate 1.12 times more return on investment than Admiral Group. However, Delek is 1.12 times more volatile than Admiral Group PLC. It trades about 0.23 of its potential returns per unit of risk. Admiral Group PLC is currently generating about -0.11 per unit of risk. If you would invest  995.00  in Delek Group on September 17, 2024 and sell it today you would earn a total of  294.00  from holding Delek Group or generate 29.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Delek Group  vs.  Admiral Group PLC

Delek Group

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward-looking signals, Delek showed solid returns over the last few months and may actually be approaching a breakup point.

Admiral Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Admiral Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental 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 Delek and Admiral Group

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

The idea behind Delek Group and Admiral Group PLC 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.