Correlation Between Sensient Technologies and Delek Drilling
Can any of the company-specific risk be diversified away by investing in both Sensient Technologies and Delek Drilling 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 Sensient Technologies and Delek Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sensient Technologies and Delek Drilling , you can compare the effects of market volatilities on Sensient Technologies and Delek Drilling 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 Sensient Technologies with a short position of Delek Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensient Technologies and Delek Drilling.
Diversification Opportunities for Sensient Technologies and Delek Drilling
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sensient and Delek is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and Delek Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Drilling and Sensient Technologies 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 Sensient Technologies are associated (or correlated) with Delek Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Drilling has no effect on the direction of Sensient Technologies i.e., Sensient Technologies and Delek Drilling go up and down completely randomly.
Pair Corralation between Sensient Technologies and Delek Drilling
Considering the 90-day investment horizon Sensient Technologies is expected to under-perform the Delek Drilling. But the stock apears to be less risky and, when comparing its historical volatility, Sensient Technologies is 1.88 times less risky than Delek Drilling. The stock trades about -0.11 of its potential returns per unit of risk. The Delek Drilling is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 311.00 in Delek Drilling on September 14, 2024 and sell it today you would lose (6.00) from holding Delek Drilling or give up 1.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sensient Technologies vs. Delek Drilling
Performance |
| Timeline |
| Sensient Technologies |
| Delek Drilling |
Sensient Technologies and Delek Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sensient Technologies and Delek Drilling
The main advantage of trading using opposite Sensient Technologies and Delek Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensient Technologies position performs unexpectedly, Delek Drilling 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 Drilling will offset losses from the drop in Delek Drilling's long position.| Sensient Technologies vs. LyondellBasell Industries NV | Sensient Technologies vs. Cabot | Sensient Technologies vs. Westlake Chemical | Sensient Technologies vs. Air Products and |
| Delek Drilling vs. Permian Resources | Delek Drilling vs. Devon Energy | Delek Drilling vs. EOG Resources | Delek Drilling vs. Coterra Energy |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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