Correlation Between EOG Resources and Delek

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

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

Diversification Opportunities for EOG Resources and Delek

0.55

Correlation Coefficient

EOG Resources  Delek

Very weak diversification

The 3 months correlation between EOG and Delek is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding EOG Resources and Delek Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Group and EOG Resources 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 EOG Resources are associated (or correlated) with Delek. 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 EOG Resources i.e., EOG Resources and Delek go up and down completely randomly.

Pair Corralation between EOG Resources and Delek

Considering the 90-day investment horizon EOG Resources is expected to generate 3.84 times less return on investment than Delek. But when comparing it to its historical volatility, EOG Resources is 1.57 times less risky than Delek. It trades about 0.05 of its potential returns per unit of risk. Delek Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,257  in Delek Group on December 24, 2024 and sell it today you would earn a total of  236.00  from holding Delek Group or generate 18.77% return on investment over 90 days.

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

EOG Resources  vs.  Delek Group

EOG Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EOG Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, EOG Resources is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Delek Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward-looking signals, Delek showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EOG Resources and Delek

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

The idea behind EOG Resources 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.