Correlation Between Devon Energy and Vitesse Energy
Can any of the company-specific risk be diversified away by investing in both Devon Energy and Vitesse 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 Vitesse 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 Vitesse Energy, you can compare the effects of market volatilities on Devon Energy and Vitesse 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 Vitesse Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Devon Energy and Vitesse Energy.
Diversification Opportunities for Devon Energy and Vitesse Energy
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Devon and Vitesse is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Devon Energy and Vitesse Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitesse Energy 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 Vitesse Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitesse Energy has no effect on the direction of Devon Energy i.e., Devon Energy and Vitesse Energy go up and down completely randomly.
Pair Corralation between Devon Energy and Vitesse Energy
Considering the 90-day investment horizon Devon Energy is expected to under-perform the Vitesse Energy. In addition to that, Devon Energy is 1.09 times more volatile than Vitesse Energy. It trades about -0.02 of its total potential returns per unit of risk. Vitesse Energy is currently generating about 0.42 per unit of volatility. If you would invest 2,471 in Vitesse Energy on August 28, 2024 and sell it today you would earn a total of 341.00 from holding Vitesse Energy or generate 13.8% 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. Vitesse Energy
Performance |
| Timeline |
| Devon Energy |
| Vitesse Energy |
Devon Energy and Vitesse Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Devon Energy and Vitesse Energy
The main advantage of trading using opposite Devon Energy and Vitesse Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Devon Energy position performs unexpectedly, Vitesse 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 Vitesse Energy will offset losses from the drop in Vitesse Energy's long position.| Devon Energy vs. Coterra Energy | Devon Energy vs. Diamondback Energy | Devon Energy vs. EOG Resources | Devon Energy vs. ConocoPhillips |
| Vitesse Energy vs. Devon Energy | Vitesse Energy vs. ConocoPhillips | Vitesse Energy vs. Occidental Petroleum | Vitesse Energy vs. Permian Resources |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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