Correlation Between Delek Energy and Energy Fuels

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

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

Diversification Opportunities for Delek Energy and Energy Fuels

0.28

Correlation Coefficient

Delek Energy  Energy Fuels

Modest diversification

The 3 months correlation between Delek and Energy is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Delek Energy and Energy Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Fuels 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 Energy Fuels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Fuels has no effect on the direction of Delek Energy i.e., Delek Energy and Energy Fuels go up and down completely randomly.

Pair Corralation between Delek Energy and Energy Fuels

Allowing for the 90-day total investment horizon Delek Energy is expected to generate 0.91 times more return on investment than Energy Fuels. However, Delek Energy is 1.09 times less risky than Energy Fuels. It trades about -0.07 of its potential returns per unit of risk. Energy Fuels is currently generating about -0.25 per unit of risk. If you would invest  1,905  in Delek Energy on November 28, 2024 and sell it today you would lose (265.00) from holding Delek Energy or give up 13.91% 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.  Energy Fuels

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 conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Energy Fuels

Risk-Adjusted Performance

Very Weak

Over the last 90 days Energy Fuels has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Delek Energy and Energy Fuels

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

The idea behind Delek Energy and Energy Fuels 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.