Correlation Between Devon Energy and PHX Minerals
Can any of the company-specific risk be diversified away by investing in both Devon Energy and PHX Minerals 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 PHX Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Devon Energy and PHX Minerals, you can compare the effects of market volatilities on Devon Energy and PHX Minerals 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 PHX Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Devon Energy and PHX Minerals.
Diversification Opportunities for Devon Energy and PHX Minerals
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Devon and PHX is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Devon Energy and PHX Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHX Minerals 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 PHX Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHX Minerals has no effect on the direction of Devon Energy i.e., Devon Energy and PHX Minerals go up and down completely randomly.
Pair Corralation between Devon Energy and PHX Minerals
Considering the 90-day investment horizon Devon Energy is expected to under-perform the PHX Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Devon Energy is 1.11 times less risky than PHX Minerals. The stock trades about -0.14 of its potential returns per unit of risk. The PHX Minerals is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 335.00 in PHX Minerals on August 29, 2024 and sell it today you would earn a total of 47.00 from holding PHX Minerals or generate 14.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Devon Energy vs. PHX Minerals
Performance |
| Timeline |
| Devon Energy |
| PHX Minerals |
Devon Energy and PHX Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Devon Energy and PHX Minerals
The main advantage of trading using opposite Devon Energy and PHX Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Devon Energy position performs unexpectedly, PHX Minerals 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 PHX Minerals will offset losses from the drop in PHX Minerals' long position.| Devon Energy vs. Coterra Energy | Devon Energy vs. Diamondback Energy | Devon Energy vs. EOG Resources | Devon Energy vs. ConocoPhillips |
| PHX Minerals vs. Evolution Petroleum | PHX Minerals vs. GeoPark | PHX Minerals vs. Granite Ridge Resources | PHX Minerals vs. California Resources Corp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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