Correlation Between Delek and Permian Resources

Can any of the company-specific risk be diversified away by investing in both Delek and Permian 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 Permian 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 Permian Resources, you can compare the effects of market volatilities on Delek and Permian 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 Permian Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek and Permian Resources.

Diversification Opportunities for Delek and Permian Resources

0.77

Correlation Coefficient

Delek  Permian Resources

Poor diversification

The 3 months correlation between Delek and Permian is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Delek Group and Permian Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Permian 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 Permian Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Permian Resources has no effect on the direction of Delek i.e., Delek and Permian Resources go up and down completely randomly.

Pair Corralation between Delek and Permian Resources

Assuming the 90 days horizon Delek Group is expected to generate 0.87 times more return on investment than Permian Resources. However, Delek Group is 1.15 times less risky than Permian Resources. It trades about 0.23 of its potential returns per unit of risk. Permian Resources is currently generating about -0.01 per unit of risk. If you would invest  1,187  in Delek Group on September 16, 2024 and sell it today you would earn a total of  102.00  from holding Delek Group or generate 8.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Delek Group  vs.  Permian Resources

Delek Group

Risk-Adjusted Performance

15 of 100

Good

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

Permian Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Permian Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Permian Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Delek and Permian Resources

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

The idea behind Delek Group and Permian 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.