Correlation Between Peoples Insurance and Delek Energy
Can any of the company-specific risk be diversified away by investing in both Peoples Insurance and Delek Energy 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 Peoples Insurance and Delek Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Peoples Insurance and Delek Energy, you can compare the effects of market volatilities on Peoples Insurance and Delek Energy 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 Peoples Insurance with a short position of Delek Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peoples Insurance and Delek Energy.
Diversification Opportunities for Peoples Insurance and Delek Energy
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Peoples and Delek is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding The Peoples Insurance and Delek Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Energy and Peoples Insurance 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 The Peoples Insurance are associated (or correlated) with Delek Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Energy has no effect on the direction of Peoples Insurance i.e., Peoples Insurance and Delek Energy go up and down completely randomly.
Pair Corralation between Peoples Insurance and Delek Energy
Assuming the 90 days horizon The Peoples Insurance is expected to generate 1.09 times more return on investment than Delek Energy. However, Peoples Insurance is 1.09 times more volatile than Delek Energy. It trades about 0.13 of its potential returns per unit of risk. Delek Energy is currently generating about 0.06 per unit of risk. If you would invest 29.00 in The Peoples Insurance on October 28, 2024 and sell it today you would earn a total of 7.00 from holding The Peoples Insurance or generate 24.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 96.83% |
Values | Daily Returns |
The Peoples Insurance vs. Delek Energy
Performance |
Timeline |
Peoples Insurance |
Delek Energy |
Peoples Insurance and Delek Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Peoples Insurance and Delek Energy
The main advantage of trading using opposite Peoples Insurance and Delek Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peoples Insurance position performs unexpectedly, Delek Energy 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 Energy will offset losses from the drop in Delek Energy's long position.Peoples Insurance vs. Western Digital | ||
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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