Correlation Between Delek Logistics and Universal Stainless

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

Diversification Opportunities for Delek Logistics and Universal Stainless

0.63

Correlation Coefficient

Delek Logistics  Universal Stainless

Poor diversification

The 3 months correlation between Delek and Universal is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Delek Logistics Partners and Universal Stainless Alloy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Stainless Alloy 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 Universal Stainless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Stainless Alloy has no effect on the direction of Delek Logistics i.e., Delek Logistics and Universal Stainless go up and down completely randomly.

Pair Corralation between Delek Logistics and Universal Stainless

Considering the 90-day investment horizon Delek Logistics Partners is expected to generate 3.14 times more return on investment than Universal Stainless. However, Delek Logistics is 3.14 times more volatile than Universal Stainless Alloy. It trades about 0.34 of its potential returns per unit of risk. Universal Stainless Alloy is currently generating about 0.29 per unit of risk. If you would invest  4,109  in Delek Logistics Partners on October 25, 2024 and sell it today you would earn a total of  328.00  from holding Delek Logistics Partners or generate 7.98% return on investment over 90 days.

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

Delek Logistics Partners  vs.  Universal Stainless Alloy

Delek Logistics Partners

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Logistics Partners are ranked lower than 21 (%) 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.

Universal Stainless Alloy

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Stainless Alloy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Universal Stainless is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Delek Logistics and Universal Stainless

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

The idea behind Delek Logistics Partners and Universal Stainless Alloy 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.