Correlation Between Hess and Devon Energy
Can any of the company-specific risk be diversified away by investing in both Hess 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 Hess and Devon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hess Corporation and Devon Energy, you can compare the effects of market volatilities on Hess 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 Hess with a short position of Devon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hess and Devon Energy.
Diversification Opportunities for Hess and Devon Energy
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hess and Devon is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hess Corp. and Devon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Devon Energy and Hess 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 Hess Corporation 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 Hess i.e., Hess and Devon Energy go up and down completely randomly.
Pair Corralation between Hess and Devon Energy
If you would invest 20,520 in Devon Energy on October 14, 2024 and sell it today you would earn a total of 1,509 from holding Devon Energy or generate 7.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Hess Corp. vs. Devon Energy
Performance |
Timeline |
Hess |
Devon Energy |
Hess and Devon Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hess and Devon Energy
The main advantage of trading using opposite Hess and Devon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hess 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.Hess vs. Occidental Petroleum | Hess vs. Devon Energy | Hess vs. Diamondback Energy, | Hess vs. APA Corporation |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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