Correlation Between Delek and Azrieli
Can any of the company-specific risk be diversified away by investing in both Delek and Azrieli 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 Azrieli into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delek Group and Azrieli Group, you can compare the effects of market volatilities on Delek and Azrieli 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 Azrieli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek and Azrieli.
Diversification Opportunities for Delek and Azrieli
Modest diversification
The 3 months correlation between Delek and Azrieli is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Delek Group and Azrieli Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azrieli Group 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 Azrieli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azrieli Group has no effect on the direction of Delek i.e., Delek and Azrieli go up and down completely randomly.
Pair Corralation between Delek and Azrieli
Assuming the 90 days trading horizon Delek Group is expected to under-perform the Azrieli. In addition to that, Delek is 1.6 times more volatile than Azrieli Group. It trades about -0.07 of its total potential returns per unit of risk. Azrieli Group is currently generating about -0.05 per unit of volatility. If you would invest 2,504,287 in Azrieli Group on January 17, 2024 and sell it today you would lose (44,287) from holding Azrieli Group or give up 1.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delek Group vs. Azrieli Group
Performance |
| Timeline |
| Delek Group |
| Azrieli Group |
Delek and Azrieli Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delek and Azrieli
The main advantage of trading using opposite Delek and Azrieli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delek position performs unexpectedly, Azrieli 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 Azrieli will offset losses from the drop in Azrieli's long position.The idea behind Delek Group and Azrieli 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.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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