Correlation Between Delek Drilling and Mondelez International

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

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

Diversification Opportunities for Delek Drilling and Mondelez International

-0.34

Correlation Coefficient

Delek Drilling  Mondelez International

Very good diversification

The 3 months correlation between Delek and Mondelez is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Delek Drilling and Mondelez International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mondelez International 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 Mondelez International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mondelez International has no effect on the direction of Delek Drilling i.e., Delek Drilling and Mondelez International go up and down completely randomly.

Pair Corralation between Delek Drilling and Mondelez International

Assuming the 90 days horizon Delek Drilling is expected to generate 1.73 times more return on investment than Mondelez International. However, Delek Drilling is 1.73 times more volatile than Mondelez International. It trades about 0.1 of its potential returns per unit of risk. Mondelez International is currently generating about -0.01 per unit of risk. If you would invest  259.00  in Delek Drilling on January 31, 2025 and sell it today you would earn a total of  76.00  from holding Delek Drilling or generate 29.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	73.49%
Values	Daily Returns

Delek Drilling   vs.  Mondelez International

Delek Drilling

Risk-Adjusted Performance

Very Weak

Over the last 90 days Delek Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Mondelez International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mondelez International are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Mondelez International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delek Drilling and Mondelez International

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

The idea behind Delek Drilling and Mondelez International 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.