Correlation Between Delek Logistics and Toro

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

Diversification Opportunities for Delek Logistics and Toro

0.03

Correlation Coefficient

Delek Logistics  Toro

Significant diversification

The 3 months correlation between Delek and Toro is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Delek Logistics Partners and Toro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toro 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 Toro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toro has no effect on the direction of Delek Logistics i.e., Delek Logistics and Toro go up and down completely randomly.

Pair Corralation between Delek Logistics and Toro

Considering the 90-day investment horizon Delek Logistics Partners is expected to generate 0.41 times more return on investment than Toro. However, Delek Logistics Partners is 2.47 times less risky than Toro. It trades about 0.34 of its potential returns per unit of risk. Toro is currently generating about 0.06 per unit of risk. If you would invest  4,095  in Delek Logistics Partners on October 26, 2024 and sell it today you would earn a total of  324.00  from holding Delek Logistics Partners or generate 7.91% return on investment over 90 days.

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

Delek Logistics Partners  vs.  Toro

Delek Logistics Partners

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Logistics Partners are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent forward-looking signals, Delek Logistics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Toro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Toro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Toro is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Delek Logistics and Toro

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

The idea behind Delek Logistics Partners and Toro 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.