Correlation Between Delek Logistics and Stepan

Can any of the company-specific risk be diversified away by investing in both Delek Logistics and Stepan 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 Stepan 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 Stepan Company, you can compare the effects of market volatilities on Delek Logistics and Stepan 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 Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek Logistics and Stepan.

Diversification Opportunities for Delek Logistics and Stepan

-0.37

Correlation Coefficient

Delek Logistics  Stepan

Very good diversification

The 3 months correlation between Delek and Stepan is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Delek Logistics Partners and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company 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 Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Delek Logistics i.e., Delek Logistics and Stepan go up and down completely randomly.

Pair Corralation between Delek Logistics and Stepan

Considering the 90-day investment horizon Delek Logistics Partners is expected to generate 0.77 times more return on investment than Stepan. However, Delek Logistics Partners is 1.31 times less risky than Stepan. It trades about 0.12 of its potential returns per unit of risk. Stepan Company is currently generating about -0.1 per unit of risk. If you would invest  3,995  in Delek Logistics Partners on December 27, 2024 and sell it today you would earn a total of  390.00  from holding Delek Logistics Partners or generate 9.76% return on investment over 90 days.

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

Delek Logistics Partners  vs.  Stepan Company

Delek Logistics Partners

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Logistics Partners are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent forward-looking signals, Delek Logistics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Stepan Company

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stepan Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Delek Logistics and Stepan

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

The idea behind Delek Logistics Partners and Stepan Company 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.