Correlation Between Delek Energy and Alliance Resource
Can any of the company-specific risk be diversified away by investing in both Delek Energy and Alliance Resource 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 Delek Energy and Alliance Resource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delek Energy and Alliance Resource Partners, you can compare the effects of market volatilities on Delek Energy and Alliance Resource 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 Delek Energy with a short position of Alliance Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek Energy and Alliance Resource.
Diversification Opportunities for Delek Energy and Alliance Resource
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Delek and Alliance is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Delek Energy and Alliance Resource Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Resource and Delek 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 Delek Energy are associated (or correlated) with Alliance Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Resource has no effect on the direction of Delek Energy i.e., Delek Energy and Alliance Resource go up and down completely randomly.
Pair Corralation between Delek Energy and Alliance Resource
Allowing for the 90-day total investment horizon Delek Energy is expected to generate 1.09 times less return on investment than Alliance Resource. In addition to that, Delek Energy is 1.71 times more volatile than Alliance Resource Partners. It trades about 0.21 of its total potential returns per unit of risk. Alliance Resource Partners is currently generating about 0.38 per unit of volatility. If you would invest 2,485 in Alliance Resource Partners on August 27, 2024 and sell it today you would earn a total of 373.00 from holding Alliance Resource Partners or generate 15.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delek Energy vs. Alliance Resource Partners
Performance |
| Timeline |
| Delek Energy |
| Alliance Resource |
Delek Energy and Alliance Resource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delek Energy and Alliance Resource
The main advantage of trading using opposite Delek Energy and Alliance Resource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delek Energy position performs unexpectedly, Alliance Resource 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 Alliance Resource will offset losses from the drop in Alliance Resource's long position.| Delek Energy vs. Crossamerica Partners LP | Delek Energy vs. Sunoco LP | Delek Energy vs. CVR Energy | Delek Energy vs. Phillips 66 |
| Alliance Resource vs. Peabody Energy Corp | Alliance Resource vs. Natural Resource Partners | Alliance Resource vs. Hallador Energy | Alliance Resource vs. NACCO Industries |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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