Correlation Between Baytex Energy and Devon Energy
Can any of the company-specific risk be diversified away by investing in both Baytex Energy and Devon Energy 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 Baytex Energy and Devon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baytex Energy Corp and Devon Energy, you can compare the effects of market volatilities on Baytex Energy and Devon Energy 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 Baytex Energy with a short position of Devon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baytex Energy and Devon Energy.
Diversification Opportunities for Baytex Energy and Devon Energy
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baytex and Devon is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Baytex Energy Corp and Devon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Devon Energy and Baytex 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 Baytex Energy Corp are associated (or correlated) with Devon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Devon Energy has no effect on the direction of Baytex Energy i.e., Baytex Energy and Devon Energy go up and down completely randomly.
Pair Corralation between Baytex Energy and Devon Energy
Considering the 90-day investment horizon Baytex Energy Corp is expected to generate 1.69 times more return on investment than Devon Energy. However, Baytex Energy is 1.69 times more volatile than Devon Energy. It trades about 0.07 of its potential returns per unit of risk. Devon Energy is currently generating about -0.11 per unit of risk. If you would invest 293.00 in Baytex Energy Corp on August 23, 2024 and sell it today you would earn a total of 9.00 from holding Baytex Energy Corp or generate 3.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baytex Energy Corp vs. Devon Energy
Performance |
| Timeline |
| Baytex Energy Corp |
| Devon Energy |
Baytex Energy and Devon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baytex Energy and Devon Energy
The main advantage of trading using opposite Baytex Energy and Devon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baytex Energy position performs unexpectedly, Devon Energy 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 Devon Energy will offset losses from the drop in Devon Energy's long position.| Baytex Energy vs. Vermilion Energy | Baytex Energy vs. Obsidian Energy | Baytex Energy vs. Canadian Natural Resources | Baytex Energy vs. Ovintiv |
| Devon Energy vs. Coterra Energy | Devon Energy vs. Diamondback Energy | Devon Energy vs. EOG Resources | Devon Energy vs. ConocoPhillips |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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