Correlation Between Delek Energy and Phillips

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

By analyzing existing cross correlation between Delek Energy and Phillips 66, you can compare the effects of market volatilities on Delek Energy and Phillips 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 Phillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek Energy and Phillips.

Diversification Opportunities for Delek Energy and Phillips

-0.29

Correlation Coefficient

Delek Energy  Phillips

Very good diversification

The 3 months correlation between Delek and Phillips is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Delek Energy and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 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 Phillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phillips 66 has no effect on the direction of Delek Energy i.e., Delek Energy and Phillips go up and down completely randomly.

Pair Corralation between Delek Energy and Phillips

Allowing for the 90-day total investment horizon Delek Energy is expected to under-perform the Phillips. In addition to that, Delek Energy is 1.77 times more volatile than Phillips 66. It trades about -0.03 of its total potential returns per unit of risk. Phillips 66 is currently generating about 0.11 per unit of volatility. If you would invest  11,099  in Phillips 66 on December 28, 2024 and sell it today you would earn a total of  1,373  from holding Phillips 66 or generate 12.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Delek Energy  vs.  Phillips 66

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 quite persistent forward-looking signals, Delek Energy is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Phillips 66

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Phillips 66 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Phillips showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delek Energy and Phillips

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

The idea behind Delek Energy and Phillips 66 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.