Correlation Between IBI Inv and Delek Automotive

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

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

Diversification Opportunities for IBI Inv and Delek Automotive

0.58

Correlation Coefficient

IBI Inv  Delek Automotive

Very weak diversification

The 3 months correlation between IBI and Delek is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding IBI Inv House and Delek Automotive Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Automotive Systems and IBI Inv 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 IBI Inv House are associated (or correlated) with Delek Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Automotive Systems has no effect on the direction of IBI Inv i.e., IBI Inv and Delek Automotive go up and down completely randomly.

Pair Corralation between IBI Inv and Delek Automotive

Assuming the 90 days trading horizon IBI Inv House is expected to generate 1.16 times more return on investment than Delek Automotive. However, IBI Inv is 1.16 times more volatile than Delek Automotive Systems. It trades about 0.15 of its potential returns per unit of risk. Delek Automotive Systems is currently generating about -0.05 per unit of risk. If you would invest  1,594,000  in IBI Inv House on December 29, 2024 and sell it today you would earn a total of  328,000  from holding IBI Inv House or generate 20.58% return on investment over 90 days.

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

IBI Inv House  vs.  Delek Automotive Systems

IBI Inv House

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IBI Inv House are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, IBI Inv sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with IBI Inv and Delek Automotive

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

The idea behind IBI Inv House and Delek Automotive Systems 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.