Correlation Between Delek and California Resources

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

By analyzing existing cross correlation between Delek Group and California Resources, you can compare the effects of market volatilities on Delek and California Resources 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 California Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek and California Resources.

Diversification Opportunities for Delek and California Resources

0.45

Correlation Coefficient

Delek  California Resources

Very weak diversification

The 3 months correlation between Delek and California is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Delek Group and California Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Resources 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 California Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Resources has no effect on the direction of Delek i.e., Delek and California Resources go up and down completely randomly.

Pair Corralation between Delek and California Resources

If you would invest  1,316  in Delek Group on October 11, 2024 and sell it today you would earn a total of  84.00  from holding Delek Group or generate 6.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.55%
Values	Daily Returns

Delek Group  vs.  California Resources

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 weak forward-looking signals, Delek showed solid returns over the last few months and may actually be approaching a breakup point.

California Resources

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days California Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly fragile basic indicators, California Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delek and California Resources

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

The idea behind Delek Group and California Resources 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.