Correlation Between Gazit Globe and Delek Automotive

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

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

Diversification Opportunities for Gazit Globe and Delek Automotive

0.72

Correlation Coefficient

Gazit Globe  Delek Automotive

Poor diversification

The 3 months correlation between Gazit and Delek is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Gazit Globe and Delek Automotive Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Automotive Systems and Gazit Globe 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 Gazit Globe are associated (or correlated) with Delek Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Automotive Systems has no effect on the direction of Gazit Globe i.e., Gazit Globe and Delek Automotive go up and down completely randomly.

Pair Corralation between Gazit Globe and Delek Automotive

Assuming the 90 days trading horizon Gazit Globe is expected to generate 1.12 times more return on investment than Delek Automotive. However, Gazit Globe is 1.12 times more volatile than Delek Automotive Systems. It trades about 0.03 of its potential returns per unit of risk. Delek Automotive Systems is currently generating about -0.01 per unit of risk. If you would invest  120,800  in Gazit Globe on September 23, 2024 and sell it today you would earn a total of  14,700  from holding Gazit Globe or generate 12.17% return on investment over 90 days.

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

Gazit Globe  vs.  Delek Automotive Systems

Gazit Globe

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gazit Globe are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gazit Globe may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Delek Automotive Systems

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Automotive Systems are ranked lower than 24 (%) 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.

Pair Trading with Gazit Globe and Delek Automotive

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

The idea behind Gazit Globe and Delek Automotive Systems 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.