Correlation Between Royal Caribbean and Delek Logistics

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

By analyzing existing cross correlation between Royal Caribbean Cruises and Delek Logistics Partners, you can compare the effects of market volatilities on Royal Caribbean and Delek Logistics 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 Royal Caribbean with a short position of Delek Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Caribbean and Delek Logistics.

Diversification Opportunities for Royal Caribbean and Delek Logistics

-0.65

Correlation Coefficient

Royal Caribbean  Delek Logistics

Excellent diversification

The 3 months correlation between Royal and Delek is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Royal Caribbean Cruises and Delek Logistics Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Logistics Partners and Royal Caribbean 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 Royal Caribbean Cruises are associated (or correlated) with Delek Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Logistics Partners has no effect on the direction of Royal Caribbean i.e., Royal Caribbean and Delek Logistics go up and down completely randomly.

Pair Corralation between Royal Caribbean and Delek Logistics

Considering the 90-day investment horizon Royal Caribbean Cruises is expected to generate 1.39 times more return on investment than Delek Logistics. However, Royal Caribbean is 1.39 times more volatile than Delek Logistics Partners. It trades about 0.05 of its potential returns per unit of risk. Delek Logistics Partners is currently generating about 0.0 per unit of risk. If you would invest  7,359  in Royal Caribbean Cruises on January 25, 2024 and sell it today you would earn a total of  6,308  from holding Royal Caribbean Cruises or generate 85.72% return on investment over 90 days.

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

Royal Caribbean Cruises  vs.  Delek Logistics Partners

Royal Caribbean Cruises

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Royal Caribbean Cruises are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Royal Caribbean may actually be approaching a critical reversion point that can send shares even higher in May 2024.

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 latest inconsistent performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Royal Caribbean and Delek Logistics

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

The idea behind Royal Caribbean Cruises and Delek Logistics 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.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.