Correlation Between Dow Jones and Delek Automotive
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Delek Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Delek Automotive Systems, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Delek Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Delek Automotive.
Diversification Opportunities for Dow Jones and Delek Automotive
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Delek is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial 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 Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and Delek Automotive go up and down completely randomly.
Pair Corralation between Dow Jones and Delek Automotive
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.72 times less return on investment than Delek Automotive. But when comparing it to its historical volatility, Dow Jones Industrial is 2.35 times less risky than Delek Automotive. It trades about 0.37 of its potential returns per unit of risk. Delek Automotive Systems is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 231,200 in Delek Automotive Systems on September 1, 2024 and sell it today you would earn a total of 25,400 from holding Delek Automotive Systems or generate 10.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.71% |
| Values | Daily Returns |
Dow Jones Industrial vs. Delek Automotive Systems
Performance |
| Timeline |
Dow Jones and Delek Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Delek Automotive Systems
Pair trading matchups for Delek Automotive
Pair Trading with Dow Jones and Delek Automotive
The main advantage of trading using opposite Dow Jones and Delek Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Delek Automotive vs. El Al Israel | Delek Automotive vs. Magic Software Enterprises | Delek Automotive vs. Neto Malinda | Delek Automotive vs. Orbit Technologies |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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