Correlation Between Devon Energy and Charter Communications
Can any of the company-specific risk be diversified away by investing in both Devon Energy and Charter Communications 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 Charter Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Devon Energy and Charter Communications, you can compare the effects of market volatilities on Devon Energy and Charter Communications 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 Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Devon Energy and Charter Communications.
Diversification Opportunities for Devon Energy and Charter Communications
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Devon and Charter is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Devon Energy and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications 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 are associated (or correlated) with Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of Devon Energy i.e., Devon Energy and Charter Communications go up and down completely randomly.
Pair Corralation between Devon Energy and Charter Communications
Assuming the 90 days trading horizon Devon Energy is expected to generate 396.43 times less return on investment than Charter Communications. But when comparing it to its historical volatility, Devon Energy is 1.5 times less risky than Charter Communications. It trades about 0.0 of its potential returns per unit of risk. Charter Communications is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 3,585 in Charter Communications on September 2, 2024 and sell it today you would earn a total of 397.00 from holding Charter Communications or generate 11.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Devon Energy vs. Charter Communications
Performance |
| Timeline |
| Devon Energy |
| Charter Communications |
Devon Energy and Charter Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Devon Energy and Charter Communications
The main advantage of trading using opposite Devon Energy and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Devon Energy position performs unexpectedly, Charter Communications 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 Charter Communications will offset losses from the drop in Charter Communications' long position.| Devon Energy vs. Charter Communications | Devon Energy vs. Marfrig Global Foods | Devon Energy vs. Zoom Video Communications | Devon Energy vs. METISA Metalrgica Timboense |
| Charter Communications vs. Intelbras SA | Charter Communications vs. Neogrid Participaes SA | Charter Communications vs. Mliuz SA | Charter Communications vs. Locaweb Servios de |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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