Correlation Between Crossamerica Partners and Delek Energy

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

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

Diversification Opportunities for Crossamerica Partners and Delek Energy

-0.07

Correlation Coefficient

Crossamerica Partners  Delek Energy

Good diversification

The 3 months correlation between Crossamerica and Delek is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Crossamerica Partners LP and Delek Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Energy and Crossamerica Partners 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 Crossamerica Partners LP are associated (or correlated) with Delek Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Energy has no effect on the direction of Crossamerica Partners i.e., Crossamerica Partners and Delek Energy go up and down completely randomly.

Pair Corralation between Crossamerica Partners and Delek Energy

Given the investment horizon of 90 days Crossamerica Partners LP is expected to generate 0.39 times more return on investment than Delek Energy. However, Crossamerica Partners LP is 2.59 times less risky than Delek Energy. It trades about 0.19 of its potential returns per unit of risk. Delek Energy is currently generating about -0.07 per unit of risk. If you would invest  2,018  in Crossamerica Partners LP on November 28, 2024 and sell it today you would earn a total of  263.00  from holding Crossamerica Partners LP or generate 13.03% return on investment over 90 days.

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

Crossamerica Partners LP  vs.  Delek Energy

Crossamerica Partners

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Crossamerica Partners LP are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Crossamerica Partners disclosed solid returns over the last few months and may actually be approaching a breakup point.

Delek Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Delek Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Crossamerica Partners and Delek Energy

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

The idea behind Crossamerica Partners LP and Delek Energy 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.