Correlation Between Delek and Brainsway

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

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

Diversification Opportunities for Delek and Brainsway

0.8

Correlation Coefficient

Delek  Brainsway

Very poor diversification

The 3 months correlation between Delek and Brainsway is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Delek Group and Brainsway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brainsway 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 Brainsway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brainsway has no effect on the direction of Delek i.e., Delek and Brainsway go up and down completely randomly.

Pair Corralation between Delek and Brainsway

Assuming the 90 days trading horizon Delek is expected to generate 1.11 times less return on investment than Brainsway. But when comparing it to its historical volatility, Delek Group is 1.71 times less risky than Brainsway. It trades about 0.26 of its potential returns per unit of risk. Brainsway is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  145,000  in Brainsway on September 12, 2024 and sell it today you would earn a total of  35,300  from holding Brainsway or generate 24.34% return on investment over 90 days.

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

Delek Group  vs.  Brainsway

Delek Group

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Group are ranked lower than 20 (%) 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.

Brainsway

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brainsway are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Brainsway sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delek and Brainsway

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

The idea behind Delek Group and Brainsway 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.