Correlation Between Devon Energy and Delek Group

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

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

Diversification Opportunities for Devon Energy and Delek Group

0.39

Correlation Coefficient

Devon Energy  Delek Group

Weak diversification

The 3 months correlation between Devon and Delek is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Devon Energy and Delek Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Group and Devon Energy 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 Devon Energy are associated (or correlated) with Delek Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Group has no effect on the direction of Devon Energy i.e., Devon Energy and Delek Group go up and down completely randomly.

Pair Corralation between Devon Energy and Delek Group

Considering the 90-day investment horizon Devon Energy is expected to generate 6.74 times less return on investment than Delek Group. In addition to that, Devon Energy is 1.73 times more volatile than Delek Group. It trades about 0.04 of its total potential returns per unit of risk. Delek Group is currently generating about 0.45 per unit of volatility. If you would invest  1,477  in Delek Group on December 5, 2024 and sell it today you would earn a total of  237.00  from holding Delek Group or generate 16.05% return on investment over 90 days.

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

Devon Energy  vs.  Delek Group

Devon Energy

Risk-Adjusted Performance

Very Weak

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

Delek Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward-looking signals, Delek Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Devon Energy and Delek Group

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

The idea behind Devon Energy and Delek Group 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.