Correlation Between Norstar and Delek

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

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

Diversification Opportunities for Norstar and Delek

0.91

Correlation Coefficient

Norstar  Delek

Almost no diversification

The 3 months correlation between Norstar and Delek is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Norstar and Delek Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Group and Norstar 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 Norstar 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 Norstar i.e., Norstar and Delek go up and down completely randomly.

Pair Corralation between Norstar and Delek

Assuming the 90 days trading horizon Norstar is expected to generate 2.07 times more return on investment than Delek. However, Norstar is 2.07 times more volatile than Delek Group. It trades about 0.39 of its potential returns per unit of risk. Delek Group is currently generating about 0.22 per unit of risk. If you would invest  128,000  in Norstar on September 14, 2024 and sell it today you would earn a total of  24,000  from holding Norstar or generate 18.75% return on investment over 90 days.

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

Norstar  vs.  Delek Group

Norstar

Risk-Adjusted Performance

21 of 100

Solid

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

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.

Pair Trading with Norstar and Delek

The main advantage of trading using opposite Norstar and Delek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norstar 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 Norstar 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.