Correlation Between Teva Pharmaceutical and Delek

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

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

Diversification Opportunities for Teva Pharmaceutical and Delek

-0.43

Correlation Coefficient

Teva Pharmaceutical  Delek

Very good diversification

The 3 months correlation between Teva and Delek is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Teva Pharmaceutical Industries and Delek Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Group and Teva Pharmaceutical 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 Teva Pharmaceutical Industries 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 Teva Pharmaceutical i.e., Teva Pharmaceutical and Delek go up and down completely randomly.

Pair Corralation between Teva Pharmaceutical and Delek

Assuming the 90 days trading horizon Teva Pharmaceutical Industries is expected to under-perform the Delek. But the stock apears to be less risky and, when comparing its historical volatility, Teva Pharmaceutical Industries is 1.2 times less risky than Delek. The stock trades about -0.15 of its potential returns per unit of risk. The Delek Group is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  4,073,181  in Delek Group on September 5, 2024 and sell it today you would earn a total of  708,819  from holding Delek Group or generate 17.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.83%
Values	Daily Returns

Teva Pharmaceutical Industries  vs.  Delek Group

Teva Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teva Pharmaceutical Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Delek Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Group are ranked lower than 15 (%) 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 Teva Pharmaceutical and Delek

The main advantage of trading using opposite Teva Pharmaceutical and Delek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teva Pharmaceutical 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 Teva Pharmaceutical Industries 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.