Correlation Between Value Capital and Delek

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

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

Diversification Opportunities for Value Capital and Delek

0.81

Correlation Coefficient

Value Capital  Delek

Very poor diversification

The 3 months correlation between Value and Delek is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Value Capital One and Delek Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Group and Value Capital 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 Value Capital One are associated (or correlated) with Delek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Group has no effect on the direction of Value Capital i.e., Value Capital and Delek go up and down completely randomly.

Pair Corralation between Value Capital and Delek

Assuming the 90 days trading horizon Value Capital One is expected to generate 4.74 times more return on investment than Delek. However, Value Capital is 4.74 times more volatile than Delek Group. It trades about 0.12 of its potential returns per unit of risk. Delek Group is currently generating about 0.29 per unit of risk. If you would invest  2,200  in Value Capital One on November 28, 2024 and sell it today you would earn a total of  1,030  from holding Value Capital One or generate 46.82% return on investment over 90 days.

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

Value Capital One  vs.  Delek Group

Value Capital One

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Value Capital One are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Value Capital sustained solid returns over the last few months and may actually be approaching a breakup point.

Delek Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Group are ranked lower than 22 (%) 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.

Pair Trading with Value Capital and Delek

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

The idea behind Value Capital One and Delek Group 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.