Correlation Between Enlight Renewable and Delek

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

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

Diversification Opportunities for Enlight Renewable and Delek

-0.15

Correlation Coefficient

Enlight Renewable  Delek

Good diversification

The 3 months correlation between Enlight and Delek is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Enlight Renewable Energy and Delek Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Group and Enlight Renewable 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 Enlight Renewable Energy are associated (or correlated) with Delek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Group has no effect on the direction of Enlight Renewable i.e., Enlight Renewable and Delek go up and down completely randomly.

Pair Corralation between Enlight Renewable and Delek

Assuming the 90 days trading horizon Enlight Renewable Energy is expected to under-perform the Delek. But the stock apears to be less risky and, when comparing its historical volatility, Enlight Renewable Energy is 1.19 times less risky than Delek. The stock trades about -0.01 of its potential returns per unit of risk. The Delek Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,160,411  in Delek Group on September 24, 2024 and sell it today you would earn a total of  1,490,589  from holding Delek Group or generate 47.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.74%
Values	Daily Returns

Enlight Renewable Energy  vs.  Delek Group

Enlight Renewable Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enlight Renewable Energy 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.

Delek Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Group are ranked lower than 17 (%) 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.

Pair Trading with Enlight Renewable and Delek

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

The idea behind Enlight Renewable Energy and Delek Group 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.