Correlation Between Delek and Bonterra Energy

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

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

Diversification Opportunities for Delek and Bonterra Energy

-0.36

Correlation Coefficient

Delek  Bonterra Energy

Very good diversification

The 3 months correlation between Delek and Bonterra is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Delek Group and Bonterra Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonterra Energy Corp and Delek 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 Delek Group are associated (or correlated) with Bonterra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonterra Energy Corp has no effect on the direction of Delek i.e., Delek and Bonterra Energy go up and down completely randomly.

Pair Corralation between Delek and Bonterra Energy

Assuming the 90 days horizon Delek Group is expected to generate 1.0 times more return on investment than Bonterra Energy. However, Delek Group is 1.0 times less risky than Bonterra Energy. It trades about 0.05 of its potential returns per unit of risk. Bonterra Energy Corp is currently generating about -0.03 per unit of risk. If you would invest  855.00  in Delek Group on October 11, 2024 and sell it today you would earn a total of  545.00  from holding Delek Group or generate 63.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Delek Group  vs.  Bonterra Energy Corp

Delek Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward-looking signals, Delek showed solid returns over the last few months and may actually be approaching a breakup point.

Bonterra Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bonterra Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Bonterra Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Delek and Bonterra Energy

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

The idea behind Delek Group and Bonterra Energy Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.