Correlation Between Frontera Energy and Delek

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

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

Diversification Opportunities for Frontera Energy and Delek

0.61

Correlation Coefficient

Frontera Energy  Delek

Poor diversification

The 3 months correlation between Frontera and Delek is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Frontera Energy Corp and Delek Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Group and Frontera 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 Frontera Energy Corp 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 Frontera Energy i.e., Frontera Energy and Delek go up and down completely randomly.

Pair Corralation between Frontera Energy and Delek

Assuming the 90 days horizon Frontera Energy Corp is expected to under-perform the Delek. But the pink sheet apears to be less risky and, when comparing its historical volatility, Frontera Energy Corp is 1.04 times less risky than Delek. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Delek Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  816.00  in Delek Group on October 26, 2024 and sell it today you would earn a total of  671.00  from holding Delek Group or generate 82.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Frontera Energy Corp  vs.  Delek Group

Frontera Energy Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Frontera Energy Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Frontera Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Delek Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Group are ranked lower than 15 (%) 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 Frontera Energy and Delek

The main advantage of trading using opposite Frontera Energy and Delek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontera Energy 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 Frontera Energy Corp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.