Correlation Between Permian Resources and Delek
Can any of the company-specific risk be diversified away by investing in both Permian Resources and Delek 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 Permian Resources and Delek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Permian Resources and Delek Group, you can compare the effects of market volatilities on Permian Resources and Delek 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 Permian Resources with a short position of Delek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Permian Resources and Delek.
Diversification Opportunities for Permian Resources and Delek
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Permian and Delek is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Permian Resources and Delek Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Group and Permian Resources 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 Permian Resources are associated (or correlated) with Delek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Group has no effect on the direction of Permian Resources i.e., Permian Resources and Delek go up and down completely randomly.
Pair Corralation between Permian Resources and Delek
Allowing for the 90-day total investment horizon Permian Resources is expected to generate 0.78 times more return on investment than Delek. However, Permian Resources is 1.28 times less risky than Delek. It trades about 0.07 of its potential returns per unit of risk. Delek Group is currently generating about 0.04 per unit of risk. If you would invest 982.00 in Permian Resources on August 31, 2024 and sell it today you would earn a total of 584.00 from holding Permian Resources or generate 59.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Permian Resources vs. Delek Group
Performance |
| Timeline |
| Permian Resources |
| Delek Group |
Permian Resources and Delek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Permian Resources and Delek
The main advantage of trading using opposite Permian Resources and Delek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Permian Resources position performs unexpectedly, Delek 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 Delek will offset losses from the drop in Delek's long position.| Permian Resources vs. Devon Energy | Permian Resources vs. EOG Resources | Permian Resources vs. Coterra Energy | Permian Resources vs. Range Resources Corp |
| Delek vs. Valeura Energy | Delek vs. Gulf Keystone Petroleum | Delek vs. Inpex Corp ADR | Delek vs. Spartan Delta Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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