Correlation Between Delek Logistics and Norfolk Southern
Can any of the company-specific risk be diversified away by investing in both Delek Logistics and Norfolk Southern 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 Logistics and Norfolk Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delek Logistics Partners and Norfolk Southern, you can compare the effects of market volatilities on Delek Logistics and Norfolk Southern 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 Logistics with a short position of Norfolk Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek Logistics and Norfolk Southern.
Diversification Opportunities for Delek Logistics and Norfolk Southern
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Delek and Norfolk is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Delek Logistics Partners and Norfolk Southern in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norfolk Southern and Delek Logistics 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 Logistics Partners are associated (or correlated) with Norfolk Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norfolk Southern has no effect on the direction of Delek Logistics i.e., Delek Logistics and Norfolk Southern go up and down completely randomly.
Pair Corralation between Delek Logistics and Norfolk Southern
Considering the 90-day investment horizon Delek Logistics is expected to generate 1.65 times less return on investment than Norfolk Southern. But when comparing it to its historical volatility, Delek Logistics Partners is 3.28 times less risky than Norfolk Southern. It trades about 0.4 of its potential returns per unit of risk. Norfolk Southern is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 25,009 in Norfolk Southern on September 2, 2024 and sell it today you would earn a total of 2,576 from holding Norfolk Southern or generate 10.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delek Logistics Partners vs. Norfolk Southern
Performance |
| Timeline |
| Delek Logistics Partners |
| Norfolk Southern |
Delek Logistics and Norfolk Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delek Logistics and Norfolk Southern
The main advantage of trading using opposite Delek Logistics and Norfolk Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delek Logistics position performs unexpectedly, Norfolk Southern 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 Norfolk Southern will offset losses from the drop in Norfolk Southern's long position.| Delek Logistics vs. CVR Energy | Delek Logistics vs. PBF Energy | Delek Logistics vs. HF Sinclair Corp | Delek Logistics vs. Par Pacific Holdings |
| Norfolk Southern vs. Union Pacific | Norfolk Southern vs. Westinghouse Air Brake | Norfolk Southern vs. Trinity Industries | Norfolk Southern vs. Greenbrier Companies |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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