Correlation Between Valero Energy and Delek Logistics

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

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

Diversification Opportunities for Valero Energy and Delek Logistics

0.69

Correlation Coefficient

Valero Energy  Delek Logistics

Poor diversification

The 3 months correlation between Valero and Delek is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Valero Energy 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 Valero Energy 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 Valero Energy 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 Valero Energy i.e., Valero Energy and Delek Logistics go up and down completely randomly.

Pair Corralation between Valero Energy and Delek Logistics

Considering the 90-day investment horizon Valero Energy is expected to generate 1.58 times more return on investment than Delek Logistics. However, Valero Energy is 1.58 times more volatile than Delek Logistics Partners. It trades about 0.09 of its potential returns per unit of risk. Delek Logistics Partners is currently generating about 0.11 per unit of risk. If you would invest  11,862  in Valero Energy on December 28, 2024 and sell it today you would earn a total of  1,286  from holding Valero Energy or generate 10.84% return on investment over 90 days.

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

Valero Energy  vs.  Delek Logistics Partners

Valero Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Valero Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Valero Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 8 (%) 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 Valero Energy and Delek Logistics

The main advantage of trading using opposite Valero Energy and Delek Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valero Energy 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 Valero Energy 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 Stocks Directory module to find actively traded stocks across global markets.