Correlation Between Delek Drilling and SNDL

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

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

Diversification Opportunities for Delek Drilling and SNDL

-0.53

Correlation Coefficient

Delek Drilling  SNDL

Excellent diversification

The 3 months correlation between Delek and SNDL is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Delek Drilling and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc and Delek Drilling 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 Drilling are associated (or correlated) with SNDL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNDL Inc has no effect on the direction of Delek Drilling i.e., Delek Drilling and SNDL go up and down completely randomly.

Pair Corralation between Delek Drilling and SNDL

Assuming the 90 days horizon Delek Drilling is expected to generate 0.75 times more return on investment than SNDL. However, Delek Drilling is 1.33 times less risky than SNDL. It trades about 0.18 of its potential returns per unit of risk. SNDL Inc is currently generating about -0.02 per unit of risk. If you would invest  255.00  in Delek Drilling on October 15, 2024 and sell it today you would earn a total of  76.00  from holding Delek Drilling or generate 29.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Delek Drilling   vs.  SNDL Inc

Delek Drilling

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Drilling are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Delek Drilling reported solid returns over the last few months and may actually be approaching a breakup point.

SNDL Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SNDL Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, SNDL is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Delek Drilling and SNDL

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

The idea behind Delek Drilling and SNDL Inc 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.