Correlation Between Delek and Oil Refineries

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

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

Diversification Opportunities for Delek and Oil Refineries

0.44

Correlation Coefficient

Delek  Oil Refineries

Very weak diversification

The 3 months correlation between Delek and Oil is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Delek Group and Oil Refineries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Refineries and Delek 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 Group are associated (or correlated) with Oil Refineries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Refineries has no effect on the direction of Delek i.e., Delek and Oil Refineries go up and down completely randomly.

Pair Corralation between Delek and Oil Refineries

Assuming the 90 days trading horizon Delek Group is expected to generate 1.06 times more return on investment than Oil Refineries. However, Delek is 1.06 times more volatile than Oil Refineries. It trades about 0.2 of its potential returns per unit of risk. Oil Refineries is currently generating about 0.02 per unit of risk. If you would invest  4,754,000  in Delek Group on October 10, 2024 and sell it today you would earn a total of  359,000  from holding Delek Group or generate 7.55% return on investment over 90 days.

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

Delek Group  vs.  Oil Refineries

Delek Group

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Group are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Delek unveiled solid returns over the last few months and may actually be approaching a breakup point.

Oil Refineries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oil Refineries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Oil Refineries is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Delek and Oil Refineries

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

The idea behind Delek Group and Oil Refineries 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.