Correlation Between Devon Energy and Inpex Corp
Can any of the company-specific risk be diversified away by investing in both Devon Energy and Inpex Corp 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 Inpex Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Devon Energy and Inpex Corp ADR, you can compare the effects of market volatilities on Devon Energy and Inpex Corp 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 Inpex Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Devon Energy and Inpex Corp.
Diversification Opportunities for Devon Energy and Inpex Corp
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Devon and Inpex is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Devon Energy and Inpex Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inpex Corp ADR 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 Inpex Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inpex Corp ADR has no effect on the direction of Devon Energy i.e., Devon Energy and Inpex Corp go up and down completely randomly.
Pair Corralation between Devon Energy and Inpex Corp
Considering the 90-day investment horizon Devon Energy is expected to generate 1.15 times more return on investment than Inpex Corp. However, Devon Energy is 1.15 times more volatile than Inpex Corp ADR. It trades about -0.01 of its potential returns per unit of risk. Inpex Corp ADR is currently generating about -0.04 per unit of risk. If you would invest 3,814 in Devon Energy on August 30, 2024 and sell it today you would lose (30.00) from holding Devon Energy or give up 0.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Devon Energy vs. Inpex Corp ADR
Performance |
| Timeline |
| Devon Energy |
| Inpex Corp ADR |
Devon Energy and Inpex Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Devon Energy and Inpex Corp
The main advantage of trading using opposite Devon Energy and Inpex Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Devon Energy position performs unexpectedly, Inpex Corp 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 Inpex Corp will offset losses from the drop in Inpex Corp's long position.| Devon Energy vs. Coterra Energy | Devon Energy vs. Diamondback Energy | Devon Energy vs. EOG Resources | Devon Energy vs. ConocoPhillips |
| Inpex Corp vs. Permian Resources | Inpex Corp vs. Devon Energy | Inpex Corp vs. EOG Resources | Inpex Corp 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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