Correlation Between Bright Scholar and Delek Logistics

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

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

Diversification Opportunities for Bright Scholar and Delek Logistics

0.19

Correlation Coefficient

Bright Scholar  Delek Logistics

Average diversification

The 3 months correlation between Bright and Delek is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Bright Scholar Education 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 Bright Scholar 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 Bright Scholar Education 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 Bright Scholar i.e., Bright Scholar and Delek Logistics go up and down completely randomly.

Pair Corralation between Bright Scholar and Delek Logistics

Given the investment horizon of 90 days Bright Scholar Education is expected to generate 3.4 times more return on investment than Delek Logistics. However, Bright Scholar is 3.4 times more volatile than Delek Logistics Partners. It trades about 0.1 of its potential returns per unit of risk. Delek Logistics Partners is currently generating about 0.14 per unit of risk. If you would invest  195.00  in Bright Scholar Education on September 18, 2024 and sell it today you would earn a total of  10.08  from holding Bright Scholar Education or generate 5.17% return on investment over 90 days.

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

Bright Scholar Education  vs.  Delek Logistics Partners

Bright Scholar Education

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bright Scholar Education are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Bright Scholar may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Delek Logistics Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delek Logistics Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Delek Logistics is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Bright Scholar and Delek Logistics

The main advantage of trading using opposite Bright Scholar and Delek Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Scholar 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 Bright Scholar Education 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.