Correlation Between Delek Logistics and USA Compression

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

Diversification Opportunities for Delek Logistics and USA Compression

0.12

Correlation Coefficient

Delek Logistics  USA Compression

Average diversification

The 3 months correlation between Delek and USA is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Delek Logistics Partners and USA Compression Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USA Compression 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 USA Compression. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USA Compression Partners has no effect on the direction of Delek Logistics i.e., Delek Logistics and USA Compression go up and down completely randomly.

Pair Corralation between Delek Logistics and USA Compression

Considering the 90-day investment horizon Delek Logistics Partners is expected to under-perform the USA Compression. In addition to that, Delek Logistics is 1.16 times more volatile than USA Compression Partners. It trades about -0.02 of its total potential returns per unit of risk. USA Compression Partners is currently generating about 0.02 per unit of volatility. If you would invest  2,238  in USA Compression Partners on September 29, 2024 and sell it today you would earn a total of  29.00  from holding USA Compression Partners or generate 1.3% return on investment over 90 days.

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

Delek Logistics Partners  vs.  USA Compression 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.

USA Compression Partners

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in USA Compression Partners are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, USA Compression is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Delek Logistics and USA Compression

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

The idea behind Delek Logistics Partners and USA Compression 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.