Correlation Between First Community and Delek Drilling

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

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

Diversification Opportunities for First Community and Delek Drilling

0.55

Correlation Coefficient

First Community  Delek Drilling

Very weak diversification

The 3 months correlation between First and Delek is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding First Community and Delek Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Drilling and First Community 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 First Community are associated (or correlated) with Delek Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Drilling has no effect on the direction of First Community i.e., First Community and Delek Drilling go up and down completely randomly.

Pair Corralation between First Community and Delek Drilling

Assuming the 90 days horizon First Community is expected to generate 5.47 times less return on investment than Delek Drilling. But when comparing it to its historical volatility, First Community is 3.14 times less risky than Delek Drilling. It trades about 0.11 of its potential returns per unit of risk. Delek Drilling is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  335.00  in Delek Drilling on May 4, 2025 and sell it today you would earn a total of  116.00  from holding Delek Drilling or generate 34.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.92%
Values	Daily Returns

First Community  vs.  Delek Drilling

First Community

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Community are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, First Community is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Delek Drilling

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Drilling are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Delek Drilling reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Community and Delek Drilling

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

The idea behind First Community and Delek Drilling 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.