Correlation Between Delek Drilling and 124857AN3

Can any of the company-specific risk be diversified away by investing in both Delek Drilling and 124857AN3 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 124857AN3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Delek Drilling and CBS P NEW, you can compare the effects of market volatilities on Delek Drilling and 124857AN3 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 124857AN3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek Drilling and 124857AN3.

Diversification Opportunities for Delek Drilling and 124857AN3

0.12

Correlation Coefficient

Delek Drilling  124857AN3

Average diversification

The 3 months correlation between Delek and 124857AN3 is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Delek Drilling and CBS P NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBS P NEW 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 124857AN3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBS P NEW has no effect on the direction of Delek Drilling i.e., Delek Drilling and 124857AN3 go up and down completely randomly.

Pair Corralation between Delek Drilling and 124857AN3

Assuming the 90 days horizon Delek Drilling is expected to generate 1.31 times more return on investment than 124857AN3. However, Delek Drilling is 1.31 times more volatile than CBS P NEW. It trades about 0.14 of its potential returns per unit of risk. CBS P NEW is currently generating about -0.07 per unit of risk. If you would invest  267.00  in Delek Drilling on September 12, 2024 and sell it today you would earn a total of  58.00  from holding Delek Drilling or generate 21.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	84.13%
Values	Daily Returns

Delek Drilling   vs.  CBS P NEW

Delek Drilling

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Drilling are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Delek Drilling reported solid returns over the last few months and may actually be approaching a breakup point.

CBS P NEW

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CBS P NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CBS P NEW investors.

Pair Trading with Delek Drilling and 124857AN3

The main advantage of trading using opposite Delek Drilling and 124857AN3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delek Drilling position performs unexpectedly, 124857AN3 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 124857AN3 will offset losses from the drop in 124857AN3's long position.

The idea behind Delek Drilling and CBS P NEW 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.