Correlation Between Delek Drilling and ATT

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

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

Diversification Opportunities for Delek Drilling and ATT

-0.87

Correlation Coefficient

Delek Drilling  ATT

Pay attention - limited upside

The 3 months correlation between Delek and ATT is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Delek Drilling and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Delek Drilling i.e., Delek Drilling and ATT go up and down completely randomly.

Pair Corralation between Delek Drilling and ATT

Assuming the 90 days horizon Delek Drilling is expected to generate 1.91 times more return on investment than ATT. However, Delek Drilling is 1.91 times more volatile than ATT Inc. It trades about 0.02 of its potential returns per unit of risk. ATT Inc is currently generating about -0.14 per unit of risk. If you would invest  325.00  in Delek Drilling on October 11, 2024 and sell it today you would earn a total of  2.00  from holding Delek Drilling or generate 0.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Delek Drilling   vs.  ATT Inc

Delek Drilling

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Drilling are ranked lower than 13 (%) 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.

ATT Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Preferred Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Delek Drilling and ATT

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

The idea behind Delek Drilling and ATT 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.