Correlation Between Devon Energy and VOC Energy
Can any of the company-specific risk be diversified away by investing in both Devon Energy and VOC 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 VOC 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 VOC Energy Trust, you can compare the effects of market volatilities on Devon Energy and VOC 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 VOC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Devon Energy and VOC Energy.
Diversification Opportunities for Devon Energy and VOC Energy
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Devon and VOC is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Devon Energy and VOC Energy Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VOC Energy Trust 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 VOC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VOC Energy Trust has no effect on the direction of Devon Energy i.e., Devon Energy and VOC Energy go up and down completely randomly.
Pair Corralation between Devon Energy and VOC Energy
Considering the 90-day investment horizon Devon Energy is expected to generate 0.66 times more return on investment than VOC Energy. However, Devon Energy is 1.51 times less risky than VOC Energy. It trades about -0.01 of its potential returns per unit of risk. VOC Energy Trust is currently generating about -0.17 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Devon Energy vs. VOC Energy Trust
Performance |
| Timeline |
| Devon Energy |
| VOC Energy Trust |
Devon Energy and VOC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Devon Energy and VOC Energy
The main advantage of trading using opposite Devon Energy and VOC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Devon Energy position performs unexpectedly, VOC 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 VOC Energy will offset losses from the drop in VOC Energy's long position.| Devon Energy vs. Coterra Energy | Devon Energy vs. Diamondback Energy | Devon Energy vs. EOG Resources | Devon Energy vs. ConocoPhillips |
| VOC Energy vs. Cross Timbers Royalty | VOC Energy vs. North European Oil | VOC Energy vs. Sabine Royalty Trust | VOC Energy vs. Permianville Royalty Trust |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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