Correlation Between Delek Energy and Brighthouse Financial

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

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

Diversification Opportunities for Delek Energy and Brighthouse Financial

0.3

Correlation Coefficient

Delek Energy  Brighthouse Financial

Weak diversification

The 3 months correlation between Delek and Brighthouse is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Delek Energy and Brighthouse Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brighthouse Financial and Delek Energy 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 Energy are associated (or correlated) with Brighthouse Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brighthouse Financial has no effect on the direction of Delek Energy i.e., Delek Energy and Brighthouse Financial go up and down completely randomly.

Pair Corralation between Delek Energy and Brighthouse Financial

Allowing for the 90-day total investment horizon Delek Energy is expected to under-perform the Brighthouse Financial. In addition to that, Delek Energy is 2.28 times more volatile than Brighthouse Financial. It trades about -0.04 of its total potential returns per unit of risk. Brighthouse Financial is currently generating about -0.07 per unit of volatility. If you would invest  2,290  in Brighthouse Financial on December 30, 2024 and sell it today you would lose (159.00) from holding Brighthouse Financial or give up 6.94% of portfolio value over 90 days.

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

Delek Energy  vs.  Brighthouse Financial

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 latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Brighthouse Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brighthouse Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Delek Energy and Brighthouse Financial

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

The idea behind Delek Energy and Brighthouse Financial 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.