Correlation Between Devon Energy and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Devon Energy and LPKF Laser 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 Devon Energy and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Devon Energy Corp and LPKF Laser Electronics, you can compare the effects of market volatilities on Devon Energy and LPKF Laser 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 Devon Energy with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Devon Energy and LPKF Laser.
Diversification Opportunities for Devon Energy and LPKF Laser
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Devon and LPKF is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Devon Energy Corp and LPKF Laser Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPKF Laser Electronics and Devon Energy 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 Devon Energy Corp are associated (or correlated) with LPKF Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPKF Laser Electronics has no effect on the direction of Devon Energy i.e., Devon Energy and LPKF Laser go up and down completely randomly.
Pair Corralation between Devon Energy and LPKF Laser
Assuming the 90 days trading horizon Devon Energy Corp is expected to generate 2.54 times more return on investment than LPKF Laser. However, Devon Energy is 2.54 times more volatile than LPKF Laser Electronics. It trades about -0.01 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about -0.14 per unit of risk. If you would invest 3,859 in Devon Energy Corp on August 28, 2024 and sell it today you would lose (25.00) from holding Devon Energy Corp or give up 0.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Devon Energy Corp vs. LPKF Laser Electronics
Performance |
| Timeline |
| Devon Energy Corp |
| LPKF Laser Electronics |
Devon Energy and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Devon Energy and LPKF Laser
The main advantage of trading using opposite Devon Energy and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Devon Energy position performs unexpectedly, LPKF Laser 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 LPKF Laser will offset losses from the drop in LPKF Laser's long position.| Devon Energy vs. LPKF Laser Electronics | Devon Energy vs. Pentair PLC | Devon Energy vs. Elmos Semiconductor SE | Devon Energy vs. Finnair Oyj |
| LPKF Laser vs. Samsung Electronics Co | LPKF Laser vs. Samsung Electronics Co | LPKF Laser vs. Hyundai Motor | LPKF Laser vs. Toyota Motor Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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