Correlation Between Delek Drilling and Sable Offshore

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

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

Diversification Opportunities for Delek Drilling and Sable Offshore

-0.04

Correlation Coefficient

Delek Drilling  Sable Offshore

Good diversification

The 3 months correlation between Delek and Sable is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Delek Drilling and Sable Offshore Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sable Offshore Corp and Delek Drilling 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 Drilling are associated (or correlated) with Sable Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sable Offshore Corp has no effect on the direction of Delek Drilling i.e., Delek Drilling and Sable Offshore go up and down completely randomly.

Pair Corralation between Delek Drilling and Sable Offshore

Assuming the 90 days horizon Delek Drilling is expected to generate 0.51 times more return on investment than Sable Offshore. However, Delek Drilling is 1.97 times less risky than Sable Offshore. It trades about 0.11 of its potential returns per unit of risk. Sable Offshore Corp is currently generating about -0.04 per unit of risk. If you would invest  267.00  in Delek Drilling on September 17, 2024 and sell it today you would earn a total of  45.00  from holding Delek Drilling or generate 16.85% return on investment over 90 days.

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

Delek Drilling   vs.  Sable Offshore Corp

Delek Drilling

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Drilling are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Delek Drilling reported solid returns over the last few months and may actually be approaching a breakup point.

Sable Offshore Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sable Offshore Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Delek Drilling and Sable Offshore

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

The idea behind Delek Drilling and Sable Offshore 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.