Correlation Between Delek and Norstar
Can any of the company-specific risk be diversified away by investing in both Delek and Norstar 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 Norstar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delek Group and Norstar, you can compare the effects of market volatilities on Delek and Norstar 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 Norstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek and Norstar.
Diversification Opportunities for Delek and Norstar
Almost no diversification
The 3 months correlation between Delek and Norstar is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Delek Group and Norstar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norstar 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 Norstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norstar has no effect on the direction of Delek i.e., Delek and Norstar go up and down completely randomly.
Pair Corralation between Delek and Norstar
Assuming the 90 days trading horizon Delek is expected to generate 2.22 times less return on investment than Norstar. But when comparing it to its historical volatility, Delek Group is 2.29 times less risky than Norstar. It trades about 0.33 of its potential returns per unit of risk. Norstar is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 116,200 in Norstar on August 31, 2024 and sell it today you would earn a total of 26,300 from holding Norstar or generate 22.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delek Group vs. Norstar
Performance |
| Timeline |
| Delek Group |
| Norstar |
Delek and Norstar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delek and Norstar
The main advantage of trading using opposite Delek and Norstar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delek position performs unexpectedly, Norstar 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 Norstar will offset losses from the drop in Norstar's long position.| Delek vs. Fattal 1998 Holdings | Delek vs. El Al Israel | Delek vs. Bank Leumi Le Israel | Delek vs. Teva Pharmaceutical Industries |
| Norstar vs. Delek Group | Norstar vs. Fattal 1998 Holdings | Norstar vs. Azrieli Group | Norstar vs. Melisron |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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