Correlation Between EnQuest PLC and Devon Energy
Can any of the company-specific risk be diversified away by investing in both EnQuest PLC and Devon 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 EnQuest PLC and Devon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EnQuest PLC and Devon Energy, you can compare the effects of market volatilities on EnQuest PLC and Devon 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 EnQuest PLC with a short position of Devon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnQuest PLC and Devon Energy.
Diversification Opportunities for EnQuest PLC and Devon Energy
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between EnQuest and Devon is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding EnQuest PLC and Devon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Devon Energy and EnQuest PLC 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 EnQuest PLC are associated (or correlated) with Devon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Devon Energy has no effect on the direction of EnQuest PLC i.e., EnQuest PLC and Devon Energy go up and down completely randomly.
Pair Corralation between EnQuest PLC and Devon Energy
Assuming the 90 days horizon EnQuest PLC is expected to generate 2.99 times more return on investment than Devon Energy. However, EnQuest PLC is 2.99 times more volatile than Devon Energy. It trades about 0.02 of its potential returns per unit of risk. Devon Energy is currently generating about -0.02 per unit of risk. If you would invest 14.00 in EnQuest PLC on September 2, 2024 and sell it today you would earn a total of 0.00 from holding EnQuest PLC or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EnQuest PLC vs. Devon Energy
Performance |
| Timeline |
| EnQuest PLC |
| Devon Energy |
EnQuest PLC and Devon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EnQuest PLC and Devon Energy
The main advantage of trading using opposite EnQuest PLC and Devon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EnQuest PLC position performs unexpectedly, Devon 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 Devon Energy will offset losses from the drop in Devon Energy's long position.| EnQuest PLC vs. ADX Energy | EnQuest PLC vs. Pine Cliff Energy | EnQuest PLC vs. AER Energy Resources | EnQuest PLC vs. Headwater Exploration |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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