Correlation Between Delek Logistics and Martin Midstream

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

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

Diversification Opportunities for Delek Logistics and Martin Midstream

-0.7

Correlation Coefficient

Delek Logistics  Martin Midstream

Excellent diversification

The 3 months correlation between Delek and Martin is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Delek Logistics Partners and Martin Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Midstream Partners and Delek Logistics 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 Logistics Partners are associated (or correlated) with Martin Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Midstream Partners has no effect on the direction of Delek Logistics i.e., Delek Logistics and Martin Midstream go up and down completely randomly.

Pair Corralation between Delek Logistics and Martin Midstream

Considering the 90-day investment horizon Delek Logistics is expected to generate 9.89 times less return on investment than Martin Midstream. But when comparing it to its historical volatility, Delek Logistics Partners is 1.45 times less risky than Martin Midstream. It trades about 0.01 of its potential returns per unit of risk. Martin Midstream Partners is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  249.00  in Martin Midstream Partners on September 15, 2024 and sell it today you would earn a total of  151.00  from holding Martin Midstream Partners or generate 60.64% return on investment over 90 days.

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

Delek Logistics Partners  vs.  Martin Midstream Partners

Delek Logistics Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delek Logistics Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Delek Logistics is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Martin Midstream Partners

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Midstream Partners are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, Martin Midstream may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Delek Logistics and Martin Midstream

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

The idea behind Delek Logistics Partners and Martin Midstream Partners 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.

Check out your portfolio center.

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.