Correlation Between Delek and Elbit Systems

Can any of the company-specific risk be diversified away by investing in both Delek and Elbit Systems 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 Elbit Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Delek Group and Elbit Systems, you can compare the effects of market volatilities on Delek and Elbit Systems 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 Elbit Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek and Elbit Systems.

Diversification Opportunities for Delek and Elbit Systems

0.74

Correlation Coefficient

Delek  Elbit Systems

Poor diversification

The 3 months correlation between Delek and Elbit is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Delek Group and Elbit Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit Systems 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 Elbit Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Systems has no effect on the direction of Delek i.e., Delek and Elbit Systems go up and down completely randomly.

Pair Corralation between Delek and Elbit Systems

Assuming the 90 days trading horizon Delek Group is expected to under-perform the Elbit Systems. In addition to that, Delek is 2.09 times more volatile than Elbit Systems. It trades about -0.23 of its total potential returns per unit of risk. Elbit Systems is currently generating about -0.32 per unit of volatility. If you would invest  7,500,000  in Elbit Systems on March 8, 2024 and sell it today you would lose (501,000) from holding Elbit Systems or give up 6.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Delek Group  vs.  Elbit Systems

Delek Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delek Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Elbit Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elbit Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Delek and Elbit Systems

The main advantage of trading using opposite Delek and Elbit Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delek position performs unexpectedly, Elbit Systems 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 Elbit Systems will offset losses from the drop in Elbit Systems' long position.

The idea behind Delek Group and Elbit Systems pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Stocks Directory module to find actively traded stocks across global markets.