Correlation Between Permian Resources and Delek Drilling

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

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

Diversification Opportunities for Permian Resources and Delek Drilling

-0.62

Correlation Coefficient

Permian Resources  Delek Drilling

Excellent diversification

The 3 months correlation between Permian and Delek is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Permian Resources and Delek Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Drilling and Permian 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 Permian Resources are associated (or correlated) with Delek Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Drilling has no effect on the direction of Permian Resources i.e., Permian Resources and Delek Drilling go up and down completely randomly.

Pair Corralation between Permian Resources and Delek Drilling

Allowing for the 90-day total investment horizon Permian Resources is not expected to generate positive returns. Moreover, Permian Resources is 1.12 times more volatile than Delek Drilling . It trades away all of its potential returns to assume current level of volatility. Delek Drilling is currently generating about 0.07 per unit of risk. If you would invest  327.00  in Delek Drilling on December 28, 2024 and sell it today you would earn a total of  25.00  from holding Delek Drilling or generate 7.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Permian Resources  vs.  Delek Drilling

Permian Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Permian Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Permian Resources is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Delek Drilling

Risk-Adjusted Performance

Modest

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

Pair Trading with Permian Resources and Delek Drilling

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

The idea behind Permian Resources and Delek Drilling 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.