Correlation Between Valero Energy and Delek Energy
Can any of the company-specific risk be diversified away by investing in both Valero Energy and Delek 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 Valero Energy and Delek Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valero Energy and Delek Energy, you can compare the effects of market volatilities on Valero Energy and Delek 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 Valero Energy with a short position of Delek Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valero Energy and Delek Energy.
Diversification Opportunities for Valero Energy and Delek Energy
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Valero and Delek is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Valero Energy and Delek Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Energy and Valero 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 Valero Energy are associated (or correlated) with Delek Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Energy has no effect on the direction of Valero Energy i.e., Valero Energy and Delek Energy go up and down completely randomly.
Pair Corralation between Valero Energy and Delek Energy
Considering the 90-day investment horizon Valero Energy is expected to generate 0.73 times more return on investment than Delek Energy. However, Valero Energy is 1.37 times less risky than Delek Energy. It trades about 0.04 of its potential returns per unit of risk. Delek Energy is currently generating about -0.04 per unit of risk. If you would invest 12,281 in Valero Energy on August 27, 2024 and sell it today you would earn a total of 1,810 from holding Valero Energy or generate 14.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valero Energy vs. Delek Energy
Performance |
| Timeline |
| Valero Energy |
| Delek Energy |
Valero Energy and Delek Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valero Energy and Delek Energy
The main advantage of trading using opposite Valero Energy and Delek Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valero Energy position performs unexpectedly, Delek 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 Delek Energy will offset losses from the drop in Delek Energy's long position.| Valero Energy vs. Phillips 66 | Valero Energy vs. HF Sinclair Corp | Valero Energy vs. PBF Energy | Valero Energy vs. CVR Energy |
| Delek Energy vs. Crossamerica Partners LP | Delek Energy vs. Sunoco LP | Delek Energy vs. CVR Energy | Delek Energy vs. Phillips 66 |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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