Correlation Between Delek Drilling and Sonos
Can any of the company-specific risk be diversified away by investing in both Delek Drilling and Sonos 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 Sonos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delek Drilling and Sonos Inc, you can compare the effects of market volatilities on Delek Drilling and Sonos 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 Sonos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek Drilling and Sonos.
Diversification Opportunities for Delek Drilling and Sonos
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Delek and Sonos is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Delek Drilling and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc 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 Sonos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonos Inc has no effect on the direction of Delek Drilling i.e., Delek Drilling and Sonos go up and down completely randomly.
Pair Corralation between Delek Drilling and Sonos
Assuming the 90 days horizon Delek Drilling is expected to generate 1.4 times more return on investment than Sonos. However, Delek Drilling is 1.4 times more volatile than Sonos Inc. It trades about 0.27 of its potential returns per unit of risk. Sonos Inc is currently generating about 0.07 per unit of risk. If you would invest 255.00 in Delek Drilling on August 27, 2024 and sell it today you would earn a total of 54.00 from holding Delek Drilling or generate 21.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delek Drilling vs. Sonos Inc
Performance |
| Timeline |
| Delek Drilling |
| Sonos Inc |
Delek Drilling and Sonos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delek Drilling and Sonos
The main advantage of trading using opposite Delek Drilling and Sonos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delek Drilling position performs unexpectedly, Sonos 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 Sonos will offset losses from the drop in Sonos' long position.| Delek Drilling vs. Permian Resources | Delek Drilling vs. Devon Energy | Delek Drilling vs. EOG Resources | Delek Drilling vs. Coterra Energy |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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