Correlation Between Delek and Bank Hapoalim

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

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

Diversification Opportunities for Delek and Bank Hapoalim

0.17

Correlation Coefficient

Delek  Bank Hapoalim

Average diversification

The 3 months correlation between Delek and Bank is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Delek Group and Bank Hapoalim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Hapoalim 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 Bank Hapoalim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Hapoalim has no effect on the direction of Delek i.e., Delek and Bank Hapoalim go up and down completely randomly.

Pair Corralation between Delek and Bank Hapoalim

Assuming the 90 days trading horizon Delek Group is expected to generate 1.39 times more return on investment than Bank Hapoalim. However, Delek is 1.39 times more volatile than Bank Hapoalim. It trades about 0.25 of its potential returns per unit of risk. Bank Hapoalim is currently generating about 0.32 per unit of risk. If you would invest  4,290,883  in Delek Group on October 26, 2024 and sell it today you would earn a total of  1,049,117  from holding Delek Group or generate 24.45% return on investment over 90 days.

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

Delek Group  vs.  Bank Hapoalim

Delek Group

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Group are ranked lower than 19 (%) 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.

Bank Hapoalim

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Hapoalim are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bank Hapoalim sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delek and Bank Hapoalim

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

The idea behind Delek Group and Bank Hapoalim 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.