Correlation Between Delek Automotive and America Movil

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

By analyzing existing cross correlation between Delek Automotive Systems and Automax Motors, you can compare the effects of market volatilities on Delek Automotive and America Movil 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 Automotive with a short position of America Movil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek Automotive and America Movil.

Diversification Opportunities for Delek Automotive and America Movil

-0.07

Correlation Coefficient

Delek Automotive  America Movil

Good diversification

The 3 months correlation between Delek and America is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Delek Automotive Systems and Automax Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automax Motors and Delek Automotive 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 Automotive Systems are associated (or correlated) with America Movil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automax Motors has no effect on the direction of Delek Automotive i.e., Delek Automotive and America Movil go up and down completely randomly.

Pair Corralation between Delek Automotive and America Movil

Assuming the 90 days trading horizon Delek Automotive Systems is expected to generate 0.76 times more return on investment than America Movil. However, Delek Automotive Systems is 1.32 times less risky than America Movil. It trades about 0.23 of its potential returns per unit of risk. Automax Motors is currently generating about -0.07 per unit of risk. If you would invest  219,000  in Delek Automotive Systems on September 12, 2024 and sell it today you would earn a total of  60,000  from holding Delek Automotive Systems or generate 27.4% return on investment over 90 days.

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

Delek Automotive Systems  vs.  Automax Motors

Delek Automotive Systems

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Automotive Systems are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Delek Automotive sustained solid returns over the last few months and may actually be approaching a breakup point.

Automax Motors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Automax Motors has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Delek Automotive and America Movil

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

The idea behind Delek Automotive Systems and Automax Motors 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.