Correlation Between Codexis and Delek Logistics

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

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

Diversification Opportunities for Codexis and Delek Logistics

0.37

Correlation Coefficient

Codexis  Delek Logistics

Weak diversification

The 3 months correlation between Codexis and Delek is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Codexis 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 Codexis 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 Codexis 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 Codexis i.e., Codexis and Delek Logistics go up and down completely randomly.

Pair Corralation between Codexis and Delek Logistics

Given the investment horizon of 90 days Codexis is expected to under-perform the Delek Logistics. In addition to that, Codexis is 5.02 times more volatile than Delek Logistics Partners. It trades about -0.13 of its total potential returns per unit of risk. Delek Logistics Partners is currently generating about 0.45 per unit of volatility. If you would invest  3,892  in Delek Logistics Partners on October 10, 2024 and sell it today you would earn a total of  313.00  from holding Delek Logistics Partners or generate 8.04% return on investment over 90 days.

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

Codexis  vs.  Delek Logistics Partners

Codexis

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Codexis are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Codexis unveiled solid returns over the last few months and may actually be approaching a breakup point.

Delek Logistics Partners

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Logistics Partners are ranked lower than 15 (%) 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 February 2025.

Pair Trading with Codexis and Delek Logistics

The main advantage of trading using opposite Codexis and Delek Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Codexis 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 Codexis 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.