Correlation Between Air Transport and Delek Logistics

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

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

Diversification Opportunities for Air Transport and Delek Logistics

0.5

Correlation Coefficient

Air Transport  Delek Logistics

Very weak diversification

The 3 months correlation between Air and Delek is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Delek Logistics Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Logistics Partners and Air Transport 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 Air Transport Services are associated (or correlated) with Delek Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Logistics Partners has no effect on the direction of Air Transport i.e., Air Transport and Delek Logistics go up and down completely randomly.

Pair Corralation between Air Transport and Delek Logistics

Given the investment horizon of 90 days Air Transport is expected to generate 4.84 times less return on investment than Delek Logistics. But when comparing it to its historical volatility, Air Transport Services is 10.8 times less risky than Delek Logistics. It trades about 0.26 of its potential returns per unit of risk. Delek Logistics Partners is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3,894  in Delek Logistics Partners on December 18, 2024 and sell it today you would earn a total of  370.00  from holding Delek Logistics Partners or generate 9.5% return on investment over 90 days.

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

Air Transport Services  vs.  Delek Logistics Partners

Air Transport Services

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Air Transport is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Delek Logistics Partners

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Logistics Partners are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent forward-looking signals, Delek Logistics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Air Transport and Delek Logistics

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

The idea behind Air Transport Services and Delek Logistics Partners 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.