Correlation Between Strat Petroleum and Delek Drilling

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

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

Diversification Opportunities for Strat Petroleum and Delek Drilling

0.0

Correlation Coefficient

Strat Petroleum  Delek Drilling

Pay attention - limited upside

The 3 months correlation between Strat and Delek is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Strat Petroleum and Delek Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Drilling and Strat Petroleum 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 Strat Petroleum 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 Strat Petroleum i.e., Strat Petroleum and Delek Drilling go up and down completely randomly.

Pair Corralation between Strat Petroleum and Delek Drilling

Given the investment horizon of 90 days Strat Petroleum is expected to generate 112.55 times more return on investment than Delek Drilling. However, Strat Petroleum is 112.55 times more volatile than Delek Drilling . It trades about 0.22 of its potential returns per unit of risk. Delek Drilling is currently generating about 0.13 per unit of risk. If you would invest  0.00  in Strat Petroleum on October 5, 2024 and sell it today you would earn a total of  0.00  from holding Strat Petroleum or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Strat Petroleum  vs.  Delek Drilling

Strat Petroleum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strat Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Strat Petroleum is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Delek Drilling

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Drilling are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Delek Drilling reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Strat Petroleum and Delek Drilling

The main advantage of trading using opposite Strat Petroleum and Delek Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strat Petroleum 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 Strat Petroleum 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 Valuation module to check real value of public entities based on technical and fundamental data.