Correlation Between Delek and CNX Resources

Can any of the company-specific risk be diversified away by investing in both Delek and CNX Resources 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 CNX Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Delek Group and CNX Resources Corp, you can compare the effects of market volatilities on Delek and CNX Resources 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 CNX Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek and CNX Resources.

Diversification Opportunities for Delek and CNX Resources

0.87

Correlation Coefficient

Delek  CNX Resources

Very poor diversification

The 3 months correlation between Delek and CNX is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Delek Group and CNX Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNX Resources Corp 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 CNX Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNX Resources Corp has no effect on the direction of Delek i.e., Delek and CNX Resources go up and down completely randomly.

Pair Corralation between Delek and CNX Resources

Assuming the 90 days horizon Delek Group is expected to generate 0.89 times more return on investment than CNX Resources. However, Delek Group is 1.12 times less risky than CNX Resources. It trades about 0.31 of its potential returns per unit of risk. CNX Resources Corp is currently generating about -0.07 per unit of risk. If you would invest  1,165  in Delek Group on September 9, 2024 and sell it today you would earn a total of  152.00  from holding Delek Group or generate 13.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Delek Group  vs.  CNX Resources Corp

Delek Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward-looking signals, Delek showed solid returns over the last few months and may actually be approaching a breakup point.

CNX Resources Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CNX Resources Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, CNX Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delek and CNX Resources

The main advantage of trading using opposite Delek and CNX Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delek position performs unexpectedly, CNX Resources 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 CNX Resources will offset losses from the drop in CNX Resources' long position.

The idea behind Delek Group and CNX Resources Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.