Correlation Between Delek Energy and Precision Drilling
Can any of the company-specific risk be diversified away by investing in both Delek Energy and Precision Drilling 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 Precision Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delek Energy and Precision Drilling, you can compare the effects of market volatilities on Delek Energy and Precision Drilling 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 Precision Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek Energy and Precision Drilling.
Diversification Opportunities for Delek Energy and Precision Drilling
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Delek and Precision is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Delek Energy and Precision Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision Drilling 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 Precision Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precision Drilling has no effect on the direction of Delek Energy i.e., Delek Energy and Precision Drilling go up and down completely randomly.
Pair Corralation between Delek Energy and Precision Drilling
Allowing for the 90-day total investment horizon Delek Energy is expected to generate 1.23 times more return on investment than Precision Drilling. However, Delek Energy is 1.23 times more volatile than Precision Drilling. It trades about 0.21 of its potential returns per unit of risk. Precision Drilling is currently generating about 0.22 per unit of risk. If you would invest 1,689 in Delek Energy on August 27, 2024 and sell it today you would earn a total of 220.00 from holding Delek Energy or generate 13.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delek Energy vs. Precision Drilling
Performance |
| Timeline |
| Delek Energy |
| Precision Drilling |
Delek Energy and Precision Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delek Energy and Precision Drilling
The main advantage of trading using opposite Delek Energy and Precision Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delek Energy position performs unexpectedly, Precision Drilling 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 Precision Drilling will offset losses from the drop in Precision Drilling's long position.| Delek Energy vs. Crossamerica Partners LP | Delek Energy vs. Sunoco LP | Delek Energy vs. CVR Energy | Delek Energy vs. Phillips 66 |
| Precision Drilling vs. Helmerich and Payne | Precision Drilling vs. Nabors Industries | Precision Drilling vs. Seadrill Limited | Precision Drilling vs. Patterson UTI Energy |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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