Correlation Between Devon Energy and Aminex PLC
Can any of the company-specific risk be diversified away by investing in both Devon Energy and Aminex PLC 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 Aminex PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Devon Energy and Aminex PLC, you can compare the effects of market volatilities on Devon Energy and Aminex PLC 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 Aminex PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Devon Energy and Aminex PLC.
Diversification Opportunities for Devon Energy and Aminex PLC
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Devon and Aminex is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Devon Energy and Aminex PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aminex PLC 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 Aminex PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aminex PLC has no effect on the direction of Devon Energy i.e., Devon Energy and Aminex PLC go up and down completely randomly.
Pair Corralation between Devon Energy and Aminex PLC
Considering the 90-day investment horizon Devon Energy is expected to under-perform the Aminex PLC. But the stock apears to be less risky and, when comparing its historical volatility, Devon Energy is 5.82 times less risky than Aminex PLC. The stock trades about -0.02 of its potential returns per unit of risk. The Aminex PLC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Aminex PLC on December 1, 2024 and sell it today you would earn a total of 0.83 from holding Aminex PLC or generate 83.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.0% |
| Values | Daily Returns |
Devon Energy vs. Aminex PLC
Performance |
| Timeline |
| Devon Energy |
| Aminex PLC |
Devon Energy and Aminex PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Devon Energy and Aminex PLC
The main advantage of trading using opposite Devon Energy and Aminex PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Devon Energy position performs unexpectedly, Aminex PLC 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 Aminex PLC will offset losses from the drop in Aminex PLC's long position.| Devon Energy vs. Coterra Energy | Devon Energy vs. Diamondback Energy | Devon Energy vs. EOG Resources | Devon Energy vs. ConocoPhillips |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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