Correlation Between Reit 1 and Delek
Can any of the company-specific risk be diversified away by investing in both Reit 1 and Delek 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 Reit 1 and Delek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reit 1 and Delek Group, you can compare the effects of market volatilities on Reit 1 and Delek 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 Reit 1 with a short position of Delek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reit 1 and Delek.
Diversification Opportunities for Reit 1 and Delek
Very poor diversification
The 3 months correlation between Reit and Delek is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Reit 1 and Delek Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Group and Reit 1 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 Reit 1 are associated (or correlated) with Delek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Group has no effect on the direction of Reit 1 i.e., Reit 1 and Delek go up and down completely randomly.
Pair Corralation between Reit 1 and Delek
Assuming the 90 days trading horizon Reit 1 is expected to generate 1.08 times less return on investment than Delek. But when comparing it to its historical volatility, Reit 1 is 1.16 times less risky than Delek. It trades about 0.07 of its potential returns per unit of risk. Delek Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,130,479 in Delek Group on August 29, 2024 and sell it today you would earn a total of 789,521 from holding Delek Group or generate 19.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reit 1 vs. Delek Group
Performance |
| Timeline |
| Reit 1 |
| Delek Group |
Reit 1 and Delek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reit 1 and Delek
The main advantage of trading using opposite Reit 1 and Delek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reit 1 position performs unexpectedly, Delek 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 will offset losses from the drop in Delek's long position.| Reit 1 vs. Sella Real Estate | Reit 1 vs. Alony Hetz Properties | Reit 1 vs. Azrieli Group | Reit 1 vs. Amot Investments |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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