Correlation Between BP Prudhoe and Delek Energy
Can any of the company-specific risk be diversified away by investing in both BP Prudhoe 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 Prudhoe 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 Prudhoe Bay and Delek Energy, you can compare the effects of market volatilities on BP Prudhoe 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 Prudhoe with a short position of Delek Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of BP Prudhoe and Delek Energy.
Diversification Opportunities for BP Prudhoe and Delek Energy
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BPT and Delek is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding BP Prudhoe Bay and Delek Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Energy and BP Prudhoe 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 Prudhoe Bay 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 Prudhoe i.e., BP Prudhoe and Delek Energy go up and down completely randomly.
Pair Corralation between BP Prudhoe and Delek Energy
Considering the 90-day investment horizon BP Prudhoe Bay is expected to generate 1.97 times more return on investment than Delek Energy. However, BP Prudhoe is 1.97 times more volatile than Delek Energy. It trades about 0.26 of its potential returns per unit of risk. Delek Energy is currently generating about -0.09 per unit of risk. If you would invest 46.00 in BP Prudhoe Bay on November 18, 2024 and sell it today you would earn a total of 18.00 from holding BP Prudhoe Bay or generate 39.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BP Prudhoe Bay vs. Delek Energy
Performance |
| Timeline |
| BP Prudhoe Bay |
| Delek Energy |
BP Prudhoe and Delek Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BP Prudhoe and Delek Energy
The main advantage of trading using opposite BP Prudhoe and Delek Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BP Prudhoe 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 Prudhoe vs. Viper Energy Ut | BP Prudhoe vs. FLEX LNG | BP Prudhoe vs. Hess Midstream Partners | BP Prudhoe vs. Frontline |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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