Correlation Between Devon Energy and Ovintiv
Can any of the company-specific risk be diversified away by investing in both Devon Energy and Ovintiv 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 Ovintiv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Devon Energy and Ovintiv, you can compare the effects of market volatilities on Devon Energy and Ovintiv 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 Ovintiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Devon Energy and Ovintiv.
Diversification Opportunities for Devon Energy and Ovintiv
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Devon and Ovintiv is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Devon Energy and Ovintiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ovintiv 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 Ovintiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ovintiv has no effect on the direction of Devon Energy i.e., Devon Energy and Ovintiv go up and down completely randomly.
Pair Corralation between Devon Energy and Ovintiv
Considering the 90-day investment horizon Devon Energy is expected to under-perform the Ovintiv. But the stock apears to be less risky and, when comparing its historical volatility, Devon Energy is 1.39 times less risky than Ovintiv. The stock trades about -0.12 of its potential returns per unit of risk. The Ovintiv is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,299 in Ovintiv on August 23, 2024 and sell it today you would earn a total of 360.00 from holding Ovintiv or generate 8.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Devon Energy vs. Ovintiv
Performance |
| Timeline |
| Devon Energy |
| Ovintiv |
Devon Energy and Ovintiv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Devon Energy and Ovintiv
The main advantage of trading using opposite Devon Energy and Ovintiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Devon Energy position performs unexpectedly, Ovintiv 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 Ovintiv will offset losses from the drop in Ovintiv's long position.| Devon Energy vs. Coterra Energy | Devon Energy vs. Diamondback Energy | Devon Energy vs. EOG Resources | Devon Energy vs. ConocoPhillips |
| Ovintiv vs. Baytex Energy Corp | Ovintiv vs. Obsidian Energy | Ovintiv vs. Canadian Natural Resources | Ovintiv vs. Vermilion 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 Stocks Directory module to find actively traded stocks across global markets.
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