Correlation Between Delek Automotive and Elbit Systems
Can any of the company-specific risk be diversified away by investing in both Delek Automotive and Elbit Systems 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 Elbit Systems 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 Elbit Systems, you can compare the effects of market volatilities on Delek Automotive and Elbit Systems 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 Elbit Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek Automotive and Elbit Systems.
Diversification Opportunities for Delek Automotive and Elbit Systems
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Delek and Elbit is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Delek Automotive Systems and Elbit Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Systems 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 Elbit Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Systems has no effect on the direction of Delek Automotive i.e., Delek Automotive and Elbit Systems go up and down completely randomly.
Pair Corralation between Delek Automotive and Elbit Systems
Assuming the 90 days trading horizon Delek Automotive Systems is expected to under-perform the Elbit Systems. In addition to that, Delek Automotive is 1.84 times more volatile than Elbit Systems. It trades about -0.16 of its total potential returns per unit of risk. Elbit Systems is currently generating about 0.04 per unit of volatility. If you would invest 7,488,000 in Elbit Systems on January 25, 2024 and sell it today you would earn a total of 67,000 from holding Elbit Systems or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delek Automotive Systems vs. Elbit Systems
Performance |
| Timeline |
| Delek Automotive Systems |
| Elbit Systems |
Delek Automotive and Elbit Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delek Automotive and Elbit Systems
The main advantage of trading using opposite Delek Automotive and Elbit Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delek Automotive position performs unexpectedly, Elbit Systems 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 Elbit Systems will offset losses from the drop in Elbit Systems' long position.| Delek Automotive vs. Clal Insurance Enterprises | Delek Automotive vs. Israel Discount Bank | Delek Automotive vs. Bezeq Israeli Telecommunication | Delek Automotive vs. Alony Hetz Properties |
| Elbit Systems vs. Alony Hetz Properties | Elbit Systems vs. Melisron | Elbit Systems vs. Shufersal | Elbit Systems vs. Israel Discount Bank |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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