Correlation Between Devon Energy and Hillcrest Energy
Can any of the company-specific risk be diversified away by investing in both Devon Energy and Hillcrest 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 Devon Energy and Hillcrest Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Devon Energy and Hillcrest Energy Technologies, you can compare the effects of market volatilities on Devon Energy and Hillcrest 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 Devon Energy with a short position of Hillcrest Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Devon Energy and Hillcrest Energy.
Diversification Opportunities for Devon Energy and Hillcrest Energy
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Devon and Hillcrest is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Devon Energy and Hillcrest Energy Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hillcrest Energy Tec 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 Hillcrest Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hillcrest Energy Tec has no effect on the direction of Devon Energy i.e., Devon Energy and Hillcrest Energy go up and down completely randomly.
Pair Corralation between Devon Energy and Hillcrest Energy
Considering the 90-day investment horizon Devon Energy is expected to generate 0.3 times more return on investment than Hillcrest Energy. However, Devon Energy is 3.34 times less risky than Hillcrest Energy. It trades about -0.06 of its potential returns per unit of risk. Hillcrest Energy Technologies is currently generating about -0.09 per unit of risk. If you would invest 3,859 in Devon Energy on August 29, 2024 and sell it today you would lose (88.00) from holding Devon Energy or give up 2.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Devon Energy vs. Hillcrest Energy Technologies
Performance |
| Timeline |
| Devon Energy |
| Hillcrest Energy Tec |
Devon Energy and Hillcrest Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Devon Energy and Hillcrest Energy
The main advantage of trading using opposite Devon Energy and Hillcrest Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Devon Energy position performs unexpectedly, Hillcrest 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 Hillcrest Energy will offset losses from the drop in Hillcrest Energy's long position.| Devon Energy vs. ConocoPhillips | Devon Energy vs. Occidental Petroleum | Devon Energy vs. EOG Resources | Devon Energy vs. Coterra Energy |
| Hillcrest Energy vs. Permian Resources | Hillcrest Energy vs. Devon Energy | Hillcrest Energy vs. EOG Resources | Hillcrest Energy vs. Coterra 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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