Correlation Between MQGAU and Delek Logistics

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

By analyzing existing cross correlation between MQGAU 134 12 JAN 27 and Delek Logistics Partners, you can compare the effects of market volatilities on MQGAU 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 MQGAU with a short position of Delek Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of MQGAU and Delek Logistics.

Diversification Opportunities for MQGAU and Delek Logistics

0.6

Correlation Coefficient

MQGAU  Delek Logistics

Poor diversification

The 3 months correlation between MQGAU and Delek is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding MQGAU 134 12 JAN 27 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 MQGAU 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 MQGAU 134 12 JAN 27 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 MQGAU i.e., MQGAU and Delek Logistics go up and down completely randomly.

Pair Corralation between MQGAU and Delek Logistics

Assuming the 90 days trading horizon MQGAU 134 12 JAN 27 is expected to under-perform the Delek Logistics. But the bond apears to be less risky and, when comparing its historical volatility, MQGAU 134 12 JAN 27 is 3.6 times less risky than Delek Logistics. The bond trades about -0.21 of its potential returns per unit of risk. The Delek Logistics Partners is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  4,275  in Delek Logistics Partners on December 4, 2024 and sell it today you would lose (39.00) from holding Delek Logistics Partners or give up 0.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	50.0%
Values	Daily Returns

MQGAU 134 12 JAN 27  vs.  Delek Logistics Partners

MQGAU 134 12

Risk-Adjusted Performance

Very Weak

Over the last 90 days MQGAU 134 12 JAN 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MQGAU is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Delek Logistics Partners

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Logistics Partners are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent forward-looking signals, Delek Logistics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with MQGAU and Delek Logistics

The main advantage of trading using opposite MQGAU and Delek Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MQGAU 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 MQGAU 134 12 JAN 27 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.