Correlation Between Devon Energy and FEC Resources
Can any of the company-specific risk be diversified away by investing in both Devon Energy and FEC Resources 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 FEC Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Devon Energy and FEC Resources, you can compare the effects of market volatilities on Devon Energy and FEC Resources 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 FEC Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Devon Energy and FEC Resources.
Diversification Opportunities for Devon Energy and FEC Resources
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Devon and FEC is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Devon Energy and FEC Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEC Resources 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 FEC Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEC Resources has no effect on the direction of Devon Energy i.e., Devon Energy and FEC Resources go up and down completely randomly.
Pair Corralation between Devon Energy and FEC Resources
Considering the 90-day investment horizon Devon Energy is expected to generate 1.36 times less return on investment than FEC Resources. But when comparing it to its historical volatility, Devon Energy is 7.94 times less risky than FEC Resources. It trades about 0.34 of its potential returns per unit of risk. FEC Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.16 in FEC Resources on October 15, 2024 and sell it today you would earn a total of 0.00 from holding FEC Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
Devon Energy vs. FEC Resources
Performance |
| Timeline |
| Devon Energy |
| FEC Resources |
Devon Energy and FEC Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Devon Energy and FEC Resources
The main advantage of trading using opposite Devon Energy and FEC Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Devon Energy position performs unexpectedly, FEC Resources 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 FEC Resources will offset losses from the drop in FEC Resources' long position.| Devon Energy vs. Coterra Energy | Devon Energy vs. Diamondback Energy | Devon Energy vs. EOG Resources | Devon Energy vs. ConocoPhillips |
| FEC Resources vs. Africa Oil Corp | FEC Resources vs. Hess Corporation | FEC Resources vs. Vaalco Energy | FEC Resources vs. Devon Energy |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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