Correlation Between BP PLC and Delek Energy
Can any of the company-specific risk be diversified away by investing in both BP PLC and Delek Energy 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 BP PLC and Delek Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BP PLC ADR and Delek Energy, you can compare the effects of market volatilities on BP PLC and Delek Energy 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 BP PLC with a short position of Delek Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of BP PLC and Delek Energy.
Diversification Opportunities for BP PLC and Delek Energy
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BP PLC and Delek is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding BP PLC ADR and Delek Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Energy and BP PLC 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 BP PLC ADR are associated (or correlated) with Delek Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Energy has no effect on the direction of BP PLC i.e., BP PLC and Delek Energy go up and down completely randomly.
Pair Corralation between BP PLC and Delek Energy
Allowing for the 90-day total investment horizon BP PLC ADR is expected to generate 0.49 times more return on investment than Delek Energy. However, BP PLC ADR is 2.04 times less risky than Delek Energy. It trades about 0.28 of its potential returns per unit of risk. Delek Energy is currently generating about -0.09 per unit of risk. If you would invest 3,169 in BP PLC ADR on November 18, 2024 and sell it today you would earn a total of 331.00 from holding BP PLC ADR or generate 10.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BP PLC ADR vs. Delek Energy
Performance |
| Timeline |
| BP PLC ADR |
| Delek Energy |
BP PLC and Delek Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BP PLC and Delek Energy
The main advantage of trading using opposite BP PLC and Delek Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BP PLC position performs unexpectedly, Delek Energy 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 Energy will offset losses from the drop in Delek Energy's long position.| BP PLC vs. TotalEnergies SE ADR | BP PLC vs. Chevron Corp | BP PLC vs. Exxon Mobil Corp | BP PLC vs. Equinor ASA ADR |
| Delek Energy vs. Crossamerica Partners LP | Delek Energy vs. Sunoco LP | Delek Energy vs. CVR Energy | Delek Energy vs. Phillips 66 |
Check out your portfolio center.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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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