Correlation Between Delek and Villar
Can any of the company-specific risk be diversified away by investing in both Delek and Villar 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 Villar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delek Group and Villar, you can compare the effects of market volatilities on Delek and Villar 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 Villar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek and Villar.
Diversification Opportunities for Delek and Villar
Very poor diversification
The 3 months correlation between Delek and Villar is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Delek Group and Villar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Villar 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 Villar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Villar has no effect on the direction of Delek i.e., Delek and Villar go up and down completely randomly.
Pair Corralation between Delek and Villar
Assuming the 90 days trading horizon Delek Group is expected to generate 1.58 times more return on investment than Villar. However, Delek is 1.58 times more volatile than Villar. It trades about 0.29 of its potential returns per unit of risk. Villar is currently generating about 0.32 per unit of risk. If you would invest 4,773,000 in Delek Group on October 26, 2024 and sell it today you would earn a total of 567,000 from holding Delek Group or generate 11.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delek Group vs. Villar
Performance |
| Timeline |
| Delek Group |
| Villar |
Delek and Villar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delek and Villar
The main advantage of trading using opposite Delek and Villar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delek position performs unexpectedly, Villar 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 Villar will offset losses from the drop in Villar's long position.| Delek vs. Fattal 1998 Holdings | Delek vs. El Al Israel | Delek vs. Bank Leumi Le Israel | Delek vs. Teva Pharmaceutical Industries |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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