Correlation Between Delek Drilling and Upbound

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

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

Diversification Opportunities for Delek Drilling and Upbound

0.76

Correlation Coefficient

Delek Drilling  Upbound

Poor diversification

The 3 months correlation between Delek and Upbound is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Delek Drilling and Upbound Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upbound Group 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 Upbound. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upbound Group has no effect on the direction of Delek Drilling i.e., Delek Drilling and Upbound go up and down completely randomly.

Pair Corralation between Delek Drilling and Upbound

Assuming the 90 days horizon Delek Drilling is expected to generate 0.91 times more return on investment than Upbound. However, Delek Drilling is 1.1 times less risky than Upbound. It trades about 0.12 of its potential returns per unit of risk. Upbound Group is currently generating about 0.06 per unit of risk. If you would invest  267.00  in Delek Drilling on September 5, 2024 and sell it today you would earn a total of  44.00  from holding Delek Drilling or generate 16.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.31%
Values	Daily Returns

Delek Drilling   vs.  Upbound Group

Delek Drilling

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Drilling are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Delek Drilling reported solid returns over the last few months and may actually be approaching a breakup point.

Upbound Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Upbound Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental drivers, Upbound may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Delek Drilling and Upbound

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

The idea behind Delek Drilling and Upbound Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.