Correlation Between Delek Energy and World Kinect

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

By analyzing existing cross correlation between Delek Energy and World Kinect, you can compare the effects of market volatilities on Delek Energy and World Kinect 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 Energy with a short position of World Kinect. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek Energy and World Kinect.

Diversification Opportunities for Delek Energy and World Kinect

0.42

Correlation Coefficient

Delek Energy  World Kinect

Very weak diversification

The 3 months correlation between Delek and World is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Delek Energy and World Kinect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Kinect and Delek 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 Delek Energy are associated (or correlated) with World Kinect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Kinect has no effect on the direction of Delek Energy i.e., Delek Energy and World Kinect go up and down completely randomly.

Pair Corralation between Delek Energy and World Kinect

Allowing for the 90-day total investment horizon Delek Energy is expected to under-perform the World Kinect. In addition to that, Delek Energy is 1.23 times more volatile than World Kinect. It trades about -0.01 of its total potential returns per unit of risk. World Kinect is currently generating about 0.02 per unit of volatility. If you would invest  2,586  in World Kinect on September 12, 2024 and sell it today you would earn a total of  257.00  from holding World Kinect or generate 9.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Delek Energy  vs.  World Kinect

Delek Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delek Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Delek Energy is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

World Kinect

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in World Kinect are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward-looking signals, World Kinect is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Delek Energy and World Kinect

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

The idea behind Delek Energy and World Kinect 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.