Correlation Between Delek Logistics and Aquestive Therapeutics

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

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

Diversification Opportunities for Delek Logistics and Aquestive Therapeutics

-0.26

Correlation Coefficient

Delek Logistics  Aquestive Therapeutics

Very good diversification

The 3 months correlation between Delek and Aquestive is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Delek Logistics Partners and Aquestive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquestive Therapeutics and Delek Logistics 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 Logistics Partners are associated (or correlated) with Aquestive Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquestive Therapeutics has no effect on the direction of Delek Logistics i.e., Delek Logistics and Aquestive Therapeutics go up and down completely randomly.

Pair Corralation between Delek Logistics and Aquestive Therapeutics

Considering the 90-day investment horizon Delek Logistics is expected to generate 12.15 times less return on investment than Aquestive Therapeutics. But when comparing it to its historical volatility, Delek Logistics Partners is 2.55 times less risky than Aquestive Therapeutics. It trades about 0.02 of its potential returns per unit of risk. Aquestive Therapeutics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  88.00  in Aquestive Therapeutics on September 26, 2024 and sell it today you would earn a total of  264.00  from holding Aquestive Therapeutics or generate 300.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Delek Logistics Partners  vs.  Aquestive Therapeutics

Delek Logistics Partners

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aquestive Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquestive Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Delek Logistics and Aquestive Therapeutics

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

The idea behind Delek Logistics Partners and Aquestive Therapeutics 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.