Correlation Between FMS Enterprises and Delek Automotive
Can any of the company-specific risk be diversified away by investing in both FMS Enterprises 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 FMS Enterprises and Delek Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FMS Enterprises Migun and Delek Automotive Systems, you can compare the effects of market volatilities on FMS Enterprises 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 FMS Enterprises with a short position of Delek Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of FMS Enterprises and Delek Automotive.
Diversification Opportunities for FMS Enterprises and Delek Automotive
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FMS and Delek is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding FMS Enterprises Migun 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 FMS Enterprises 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 FMS Enterprises Migun 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 FMS Enterprises i.e., FMS Enterprises and Delek Automotive go up and down completely randomly.
Pair Corralation between FMS Enterprises and Delek Automotive
Assuming the 90 days trading horizon FMS Enterprises is expected to generate 1.51 times less return on investment than Delek Automotive. But when comparing it to its historical volatility, FMS Enterprises Migun is 1.27 times less risky than Delek Automotive. It trades about 0.34 of its potential returns per unit of risk. Delek Automotive Systems is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 219,700 in Delek Automotive Systems on August 29, 2024 and sell it today you would earn a total of 39,500 from holding Delek Automotive Systems or generate 17.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FMS Enterprises Migun vs. Delek Automotive Systems
Performance |
| Timeline |
| FMS Enterprises Migun |
| Delek Automotive Systems |
FMS Enterprises and Delek Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FMS Enterprises and Delek Automotive
The main advantage of trading using opposite FMS Enterprises and Delek Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FMS Enterprises 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.| FMS Enterprises vs. Delek Automotive Systems | FMS Enterprises vs. Alony Hetz Properties | FMS Enterprises vs. Elbit Systems | FMS Enterprises vs. First International Bank |
| Delek Automotive vs. Alony Hetz Properties | Delek Automotive vs. Harel Insurance Investments | Delek Automotive vs. Delek Group | Delek Automotive vs. Migdal Insurance |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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