Correlation Between Delek and Israel Canada

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

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

Diversification Opportunities for Delek and Israel Canada

0.73

Correlation Coefficient

Delek  Israel Canada

Poor diversification

The 3 months correlation between Delek and Israel is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Delek Group and Israel Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Canada 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 Israel Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Canada has no effect on the direction of Delek i.e., Delek and Israel Canada go up and down completely randomly.

Pair Corralation between Delek and Israel Canada

Assuming the 90 days trading horizon Delek Group is expected to generate 0.92 times more return on investment than Israel Canada. However, Delek Group is 1.09 times less risky than Israel Canada. It trades about 0.18 of its potential returns per unit of risk. Israel Canada is currently generating about 0.1 per unit of risk. If you would invest  4,170,000  in Delek Group on September 3, 2024 and sell it today you would earn a total of  703,000  from holding Delek Group or generate 16.86% return on investment over 90 days.

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

Delek Group  vs.  Israel Canada

Delek Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Group are ranked lower than 14 (%) 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.

Israel Canada

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Delek and Israel Canada

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

The idea behind Delek Group and Israel Canada 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.