Correlation Between Delek Logistics and Catalent

Can any of the company-specific risk be diversified away by investing in both Delek Logistics and Catalent 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 Catalent 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 Catalent, you can compare the effects of market volatilities on Delek Logistics and Catalent 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 Catalent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delek Logistics and Catalent.

Diversification Opportunities for Delek Logistics and Catalent

0.17

Correlation Coefficient

Delek Logistics  Catalent

Average diversification

The 3 months correlation between Delek and Catalent is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Delek Logistics Partners and Catalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalent 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 Catalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalent has no effect on the direction of Delek Logistics i.e., Delek Logistics and Catalent go up and down completely randomly.

Pair Corralation between Delek Logistics and Catalent

Considering the 90-day investment horizon Delek Logistics is expected to generate 1.5 times less return on investment than Catalent. In addition to that, Delek Logistics is 2.69 times more volatile than Catalent. It trades about 0.04 of its total potential returns per unit of risk. Catalent is currently generating about 0.18 per unit of volatility. If you would invest  5,623  in Catalent on September 26, 2024 and sell it today you would earn a total of  725.00  from holding Catalent or generate 12.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.03%
Values	Daily Returns

Delek Logistics Partners  vs.  Catalent

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.

Catalent

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Catalent are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Catalent is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Delek Logistics and Catalent

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

The idea behind Delek Logistics Partners and Catalent 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.