Correlation Between Delek Drilling and Minerals Technologies
Can any of the company-specific risk be diversified away by investing in both Delek Drilling and Minerals Technologies 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 Drilling and Minerals Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delek Drilling and Minerals Technologies, you can compare the effects of market volatilities on Delek Drilling and Minerals Technologies 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 Drilling with a short position of Minerals Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek Drilling and Minerals Technologies.
Diversification Opportunities for Delek Drilling and Minerals Technologies
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Delek and Minerals is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Delek Drilling and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies and Delek Drilling 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 Drilling are associated (or correlated) with Minerals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerals Technologies has no effect on the direction of Delek Drilling i.e., Delek Drilling and Minerals Technologies go up and down completely randomly.
Pair Corralation between Delek Drilling and Minerals Technologies
Assuming the 90 days horizon Delek Drilling is expected to generate 1.35 times less return on investment than Minerals Technologies. But when comparing it to its historical volatility, Delek Drilling is 1.75 times less risky than Minerals Technologies. It trades about 0.17 of its potential returns per unit of risk. Minerals Technologies is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 7,593 in Minerals Technologies on August 30, 2024 and sell it today you would earn a total of 520.00 from holding Minerals Technologies or generate 6.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Delek Drilling vs. Minerals Technologies
Performance |
| Timeline |
| Delek Drilling |
| Minerals Technologies |
Delek Drilling and Minerals Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delek Drilling and Minerals Technologies
The main advantage of trading using opposite Delek Drilling and Minerals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delek Drilling position performs unexpectedly, Minerals Technologies 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 Minerals Technologies will offset losses from the drop in Minerals Technologies' long position.| Delek Drilling vs. Permian Resources | Delek Drilling vs. Devon Energy | Delek Drilling vs. EOG Resources | Delek Drilling vs. Coterra Energy |
| Minerals Technologies vs. Quaker Chemical | Minerals Technologies vs. Innospec | Minerals Technologies vs. H B Fuller | Minerals Technologies vs. Cabot |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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