Correlation Between Delek Automotive and Schnapp

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

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

Diversification Opportunities for Delek Automotive and Schnapp

0.4

Correlation Coefficient

Delek Automotive  Schnapp

Very weak diversification

The 3 months correlation between Delek and Schnapp is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Delek Automotive Systems and Schnapp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schnapp and Delek Automotive 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 Automotive Systems are associated (or correlated) with Schnapp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schnapp has no effect on the direction of Delek Automotive i.e., Delek Automotive and Schnapp go up and down completely randomly.

Pair Corralation between Delek Automotive and Schnapp

Assuming the 90 days trading horizon Delek Automotive Systems is expected to under-perform the Schnapp. But the stock apears to be less risky and, when comparing its historical volatility, Delek Automotive Systems is 1.0 times less risky than Schnapp. The stock trades about -0.05 of its potential returns per unit of risk. The Schnapp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  155,400  in Schnapp on December 30, 2024 and sell it today you would earn a total of  12,700  from holding Schnapp or generate 8.17% return on investment over 90 days.

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

Delek Automotive Systems  vs.  Schnapp

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.

Schnapp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Schnapp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Schnapp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Delek Automotive and Schnapp

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

The idea behind Delek Automotive Systems and Schnapp 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.