Correlation Between Sensient Technologies and Delek Logistics

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

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

Diversification Opportunities for Sensient Technologies and Delek Logistics

-0.02

Correlation Coefficient

Sensient Technologies  Delek Logistics

Good diversification

The 3 months correlation between Sensient and Delek is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and Delek Logistics Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Logistics Partners and Sensient Technologies 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 Sensient Technologies are associated (or correlated) with Delek Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Logistics Partners has no effect on the direction of Sensient Technologies i.e., Sensient Technologies and Delek Logistics go up and down completely randomly.

Pair Corralation between Sensient Technologies and Delek Logistics

Considering the 90-day investment horizon Sensient Technologies is expected to generate 1.48 times less return on investment than Delek Logistics. But when comparing it to its historical volatility, Sensient Technologies is 1.24 times less risky than Delek Logistics. It trades about 0.01 of its potential returns per unit of risk. Delek Logistics Partners is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,719  in Delek Logistics Partners on September 21, 2024 and sell it today you would earn a total of  280.00  from holding Delek Logistics Partners or generate 7.53% return on investment over 90 days.

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

Sensient Technologies  vs.  Delek Logistics Partners

Sensient Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sensient Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sensient Technologies is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Delek Logistics Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delek Logistics Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Delek Logistics is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Sensient Technologies and Delek Logistics

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

The idea behind Sensient Technologies and Delek Logistics Partners 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..