Correlation Between Delek Drilling and DNB Financial

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

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

Diversification Opportunities for Delek Drilling and DNB Financial

0.0

Correlation Coefficient

Delek Drilling  DNB Financial

Pay attention - limited upside

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

Pair Corralation between Delek Drilling and DNB Financial

If you would invest (100.00) in DNB Financial on January 31, 2024 and sell it today you would earn a total of  100.00  from holding DNB Financial or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Delek Drilling   vs.  DNB Financial

Delek Drilling

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Drilling are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Delek Drilling is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

DNB Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DNB Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, DNB Financial is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Delek Drilling and DNB Financial

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

The idea behind Delek Drilling and DNB Financial 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.