Correlation Between SM Energy and Delek Logistics
Can any of the company-specific risk be diversified away by investing in both SM Energy and Delek Logistics 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 SM Energy and Delek Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SM Energy Co and Delek Logistics Partners, you can compare the effects of market volatilities on SM Energy and Delek Logistics 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 SM Energy with a short position of Delek Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Energy and Delek Logistics.
Diversification Opportunities for SM Energy and Delek Logistics
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SM Energy and Delek is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding SM Energy Co and Delek Logistics Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Logistics Partners and SM Energy 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 SM Energy Co are associated (or correlated) with Delek Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Logistics Partners has no effect on the direction of SM Energy i.e., SM Energy and Delek Logistics go up and down completely randomly.
Pair Corralation between SM Energy and Delek Logistics
Allowing for the 90-day total investment horizon SM Energy Co is expected to generate 2.91 times more return on investment than Delek Logistics. However, SM Energy is 2.91 times more volatile than Delek Logistics Partners. It trades about 0.17 of its potential returns per unit of risk. Delek Logistics Partners is currently generating about 0.26 per unit of risk. If you would invest 4,178 in SM Energy Co on August 24, 2024 and sell it today you would earn a total of 368.00 from holding SM Energy Co or generate 8.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SM Energy Co vs. Delek Logistics Partners
Performance |
| Timeline |
| SM Energy |
| Delek Logistics Partners |
SM Energy and Delek Logistics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Energy and Delek Logistics
The main advantage of trading using opposite SM Energy and Delek Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Energy position performs unexpectedly, Delek Logistics 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 Logistics will offset losses from the drop in Delek Logistics' long position.| SM Energy vs. Vital Energy | SM Energy vs. Permian Resources | SM Energy vs. Matador Resources | SM Energy vs. Obsidian Energy |
| Delek Logistics vs. CVR Energy | Delek Logistics vs. PBF Energy | Delek Logistics vs. HF Sinclair Corp | Delek Logistics vs. Par Pacific Holdings |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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