Correlation Between Devon Energy and Petrus Resources
Can any of the company-specific risk be diversified away by investing in both Devon Energy and Petrus 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 Petrus 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 Petrus Resources, you can compare the effects of market volatilities on Devon Energy and Petrus 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 Petrus Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Devon Energy and Petrus Resources.
Diversification Opportunities for Devon Energy and Petrus Resources
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Devon and Petrus is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Devon Energy and Petrus Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrus 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 Petrus Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrus Resources has no effect on the direction of Devon Energy i.e., Devon Energy and Petrus Resources go up and down completely randomly.
Pair Corralation between Devon Energy and Petrus Resources
Considering the 90-day investment horizon Devon Energy is expected to under-perform the Petrus Resources. But the stock apears to be less risky and, when comparing its historical volatility, Devon Energy is 2.11 times less risky than Petrus Resources. The stock trades about -0.04 of its potential returns per unit of risk. The Petrus Resources is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 165.00 in Petrus Resources on September 3, 2024 and sell it today you would lose (62.00) from holding Petrus Resources or give up 37.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.53% |
| Values | Daily Returns |
Devon Energy vs. Petrus Resources
Performance |
| Timeline |
| Devon Energy |
| Petrus Resources |
Devon Energy and Petrus Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Devon Energy and Petrus Resources
The main advantage of trading using opposite Devon Energy and Petrus Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Devon Energy position performs unexpectedly, Petrus 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 Petrus Resources will offset losses from the drop in Petrus Resources' long position.| Devon Energy vs. Coterra Energy | Devon Energy vs. Diamondback Energy | Devon Energy vs. EOG Resources | Devon Energy vs. ConocoPhillips |
| Petrus Resources vs. FAR Limited | Petrus Resources vs. Valeura Energy | Petrus Resources vs. Epsilon Energy | Petrus Resources vs. PetroShale |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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