Correlation Between Delek Automotive and Elco
Can any of the company-specific risk be diversified away by investing in both Delek Automotive and Elco 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 Elco 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 Elco, you can compare the effects of market volatilities on Delek Automotive and Elco 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 Elco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek Automotive and Elco.
Diversification Opportunities for Delek Automotive and Elco
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Delek and Elco is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Delek Automotive Systems and Elco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elco 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 Elco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elco has no effect on the direction of Delek Automotive i.e., Delek Automotive and Elco go up and down completely randomly.
Pair Corralation between Delek Automotive and Elco
Assuming the 90 days trading horizon Delek Automotive is expected to generate 1.17 times less return on investment than Elco. In addition to that, Delek Automotive is 1.17 times more volatile than Elco. It trades about 0.14 of its total potential returns per unit of risk. Elco is currently generating about 0.19 per unit of volatility. If you would invest 1,127,406 in Elco on August 31, 2024 and sell it today you would earn a total of 194,594 from holding Elco or generate 17.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delek Automotive Systems vs. Elco
Performance |
| Timeline |
| Delek Automotive Systems |
| Elco |
Delek Automotive and Elco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delek Automotive and Elco
The main advantage of trading using opposite Delek Automotive and Elco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delek Automotive position performs unexpectedly, Elco 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 Elco will offset losses from the drop in Elco's long position.| Delek Automotive vs. Alony Hetz Properties | Delek Automotive vs. Harel Insurance Investments | Delek Automotive vs. Delek Group | Delek Automotive vs. Migdal Insurance |
| Elco vs. Alony Hetz Properties | Elco vs. Electra | Elco vs. Clal Insurance Enterprises | Elco vs. Delek Automotive Systems |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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