Correlation Between Oil Refineries and Delek

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

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

Diversification Opportunities for Oil Refineries and Delek

0.66

Correlation Coefficient

Oil Refineries  Delek

Poor diversification

The 3 months correlation between Oil and Delek is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Oil Refineries and Delek Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Group and Oil Refineries 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 Oil Refineries 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 Oil Refineries i.e., Oil Refineries and Delek go up and down completely randomly.

Pair Corralation between Oil Refineries and Delek

Assuming the 90 days trading horizon Oil Refineries is expected to generate 2.52 times less return on investment than Delek. In addition to that, Oil Refineries is 1.29 times more volatile than Delek Group. It trades about 0.08 of its total potential returns per unit of risk. Delek Group is currently generating about 0.25 per unit of volatility. If you would invest  4,290,883  in Delek Group on October 26, 2024 and sell it today you would earn a total of  1,049,117  from holding Delek Group or generate 24.45% return on investment over 90 days.

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

Oil Refineries  vs.  Delek Group

Oil Refineries

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oil Refineries are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, Oil Refineries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Delek Group

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Group are ranked lower than 19 (%) 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.

Pair Trading with Oil Refineries and Delek

The main advantage of trading using opposite Oil Refineries and Delek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil Refineries 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 Oil Refineries 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.

Check out your portfolio center.

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.