Correlation Between Delek and Aviation Links

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

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

Diversification Opportunities for Delek and Aviation Links

0.03

Correlation Coefficient

Delek  Aviation Links

Significant diversification

The 3 months correlation between Delek and Aviation is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Delek Group and Aviation Links in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aviation Links 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 Aviation Links. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aviation Links has no effect on the direction of Delek i.e., Delek and Aviation Links go up and down completely randomly.

Pair Corralation between Delek and Aviation Links

Assuming the 90 days trading horizon Delek is expected to generate 1.18 times less return on investment than Aviation Links. In addition to that, Delek is 1.0 times more volatile than Aviation Links. It trades about 0.24 of its total potential returns per unit of risk. Aviation Links is currently generating about 0.28 per unit of volatility. If you would invest  132,600  in Aviation Links on September 26, 2024 and sell it today you would earn a total of  32,200  from holding Aviation Links or generate 24.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.83%
Values	Daily Returns

Delek Group  vs.  Aviation Links

Delek Group

Risk-Adjusted Performance

18 of 100

Solid

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

Aviation Links

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aviation Links are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aviation Links sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delek and Aviation Links

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

The idea behind Delek Group and Aviation Links 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.