Correlation Between Delek Automotive and Tamar Petroleum

Can any of the company-specific risk be diversified away by investing in both Delek Automotive and Tamar Petroleum 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 Tamar Petroleum 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 Tamar Petroleum, you can compare the effects of market volatilities on Delek Automotive and Tamar Petroleum 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 Tamar Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek Automotive and Tamar Petroleum.

Diversification Opportunities for Delek Automotive and Tamar Petroleum

0.9

Correlation Coefficient

Delek Automotive  Tamar Petroleum

Almost no diversification

The 3 months correlation between Delek and Tamar is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Delek Automotive Systems and Tamar Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamar Petroleum 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 Tamar Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tamar Petroleum has no effect on the direction of Delek Automotive i.e., Delek Automotive and Tamar Petroleum go up and down completely randomly.

Pair Corralation between Delek Automotive and Tamar Petroleum

Assuming the 90 days trading horizon Delek Automotive Systems is expected to under-perform the Tamar Petroleum. In addition to that, Delek Automotive is 1.21 times more volatile than Tamar Petroleum. It trades about -0.01 of its total potential returns per unit of risk. Tamar Petroleum is currently generating about 0.11 per unit of volatility. If you would invest  89,051  in Tamar Petroleum on September 24, 2024 and sell it today you would earn a total of  143,549  from holding Tamar Petroleum or generate 161.2% return on investment over 90 days.

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

Delek Automotive Systems  vs.  Tamar Petroleum

Delek Automotive Systems

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Automotive Systems are ranked lower than 25 (%) 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.

Tamar Petroleum

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tamar Petroleum are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Tamar Petroleum sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delek Automotive and Tamar Petroleum

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

The idea behind Delek Automotive Systems and Tamar Petroleum 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.