Correlation Between Delek and Prime Energy
Can any of the company-specific risk be diversified away by investing in both Delek and Prime Energy 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 and Prime Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delek Group and Prime Energy PE, you can compare the effects of market volatilities on Delek and Prime Energy 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 with a short position of Prime Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek and Prime Energy.
Diversification Opportunities for Delek and Prime Energy
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Delek and Prime is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Delek Group and Prime Energy PE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Energy PE and Delek 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 Group are associated (or correlated) with Prime Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Energy PE has no effect on the direction of Delek i.e., Delek and Prime Energy go up and down completely randomly.
Pair Corralation between Delek and Prime Energy
Assuming the 90 days trading horizon Delek is expected to generate 1.98 times less return on investment than Prime Energy. But when comparing it to its historical volatility, Delek Group is 3.41 times less risky than Prime Energy. It trades about 0.25 of its potential returns per unit of risk. Prime Energy PE is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 60,500 in Prime Energy PE on August 26, 2024 and sell it today you would earn a total of 6,560 from holding Prime Energy PE or generate 10.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delek Group vs. Prime Energy PE
Performance |
| Timeline |
| Delek Group |
| Prime Energy PE |
Delek and Prime Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delek and Prime Energy
The main advantage of trading using opposite Delek and Prime Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delek position performs unexpectedly, Prime Energy 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 Prime Energy will offset losses from the drop in Prime Energy's long position.| Delek vs. Atreyu Capital Markets | Delek vs. IBI Inv House | Delek vs. Delek Automotive Systems | Delek vs. Scope Metals Group |
| Prime Energy vs. Enlight Renewable Energy | Prime Energy vs. Energix Renewable Energies | Prime Energy vs. Brainsway | Prime Energy vs. Mivne Real Estate |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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