Correlation Between Delek Logistics and Adams Resources

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

Diversification Opportunities for Delek Logistics and Adams Resources

-0.66

Correlation Coefficient

Delek Logistics  Adams Resources

Excellent diversification

The 3 months correlation between Delek and Adams is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Delek Logistics Partners and Adams Resources Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adams Resources Energy 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 Adams Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adams Resources Energy has no effect on the direction of Delek Logistics i.e., Delek Logistics and Adams Resources go up and down completely randomly.

Pair Corralation between Delek Logistics and Adams Resources

Considering the 90-day investment horizon Delek Logistics Partners is expected to under-perform the Adams Resources. But the stock apears to be less risky and, when comparing its historical volatility, Delek Logistics Partners is 1.17 times less risky than Adams Resources. The stock trades about 0.0 of its potential returns per unit of risk. The Adams Resources Energy is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,938  in Adams Resources Energy on January 30, 2024 and sell it today you would earn a total of  47.00  from holding Adams Resources Energy or generate 1.6% return on investment over 90 days.

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

Delek Logistics Partners  vs.  Adams Resources Energy

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 inconsistent performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Adams Resources Energy

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adams Resources Energy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, Adams Resources exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delek Logistics and Adams Resources

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

The idea behind Delek Logistics Partners and Adams Resources Energy 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.