Correlation Between Delek Logistics and Star Gas

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

Diversification Opportunities for Delek Logistics and Star Gas

0.0

Correlation Coefficient

Delek Logistics  Star Gas

Pay attention - limited upside

The 3 months correlation between Delek and Star is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Delek Logistics Partners and Star Gas Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Gas Partners 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 Star Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Gas Partners has no effect on the direction of Delek Logistics i.e., Delek Logistics and Star Gas go up and down completely randomly.

Pair Corralation between Delek Logistics and Star Gas

Considering the 90-day investment horizon Delek Logistics Partners is expected to under-perform the Star Gas. But the stock apears to be less risky and, when comparing its historical volatility, Delek Logistics Partners is 1.03 times less risky than Star Gas. The stock trades about -0.01 of its potential returns per unit of risk. The Star Gas Partners is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,132  in Star Gas Partners on September 1, 2024 and sell it today you would earn a total of  134.00  from holding Star Gas Partners or generate 11.84% return on investment over 90 days.

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

Delek Logistics Partners  vs.  Star Gas Partners

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.

Star Gas Partners

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Star Gas Partners are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Star Gas may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Delek Logistics and Star Gas

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

The idea behind Delek Logistics Partners and Star Gas Partners 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.