Correlation Between Devon Energy and APA
Can any of the company-specific risk be diversified away by investing in both Devon Energy and APA 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 APA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Devon Energy and APA Corporation, you can compare the effects of market volatilities on Devon Energy and APA 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 APA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Devon Energy and APA.
Diversification Opportunities for Devon Energy and APA
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Devon and APA is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Devon Energy and APA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Corporation 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 APA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APA Corporation has no effect on the direction of Devon Energy i.e., Devon Energy and APA go up and down completely randomly.
Pair Corralation between Devon Energy and APA
Considering the 90-day investment horizon Devon Energy is expected to generate 0.51 times more return on investment than APA. However, Devon Energy is 1.95 times less risky than APA. It trades about -0.02 of its potential returns per unit of risk. APA Corporation is currently generating about -0.05 per unit of risk. If you would invest 3,859 in Devon Energy on August 28, 2024 and sell it today you would lose (32.00) from holding Devon Energy or give up 0.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Devon Energy vs. APA Corp.
Performance |
| Timeline |
| Devon Energy |
| APA Corporation |
Devon Energy and APA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Devon Energy and APA
The main advantage of trading using opposite Devon Energy and APA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Devon Energy position performs unexpectedly, APA 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 APA will offset losses from the drop in APA's long position.| Devon Energy vs. ConocoPhillips | Devon Energy vs. Occidental Petroleum | Devon Energy vs. Permian Resources | Devon Energy vs. EOG Resources |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |