Correlation Between PHX Minerals and Devon Energy
Can any of the company-specific risk be diversified away by investing in both PHX Minerals 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 PHX Minerals and Devon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PHX Minerals and Devon Energy, you can compare the effects of market volatilities on PHX Minerals 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 PHX Minerals with a short position of Devon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHX Minerals and Devon Energy.
Diversification Opportunities for PHX Minerals and Devon Energy
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PHX and Devon is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding PHX Minerals and Devon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Devon Energy and PHX Minerals 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 PHX Minerals 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 PHX Minerals i.e., PHX Minerals and Devon Energy go up and down completely randomly.
Pair Corralation between PHX Minerals and Devon Energy
Considering the 90-day investment horizon PHX Minerals is expected to generate 1.0 times more return on investment than Devon Energy. However, PHX Minerals is 1.0 times less risky than Devon Energy. It trades about 0.1 of its potential returns per unit of risk. Devon Energy is currently generating about -0.08 per unit of risk. If you would invest 313.00 in PHX Minerals on August 27, 2024 and sell it today you would earn a total of 71.00 from holding PHX Minerals or generate 22.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PHX Minerals vs. Devon Energy
Performance |
| Timeline |
| PHX Minerals |
| Devon Energy |
PHX Minerals and Devon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PHX Minerals and Devon Energy
The main advantage of trading using opposite PHX Minerals and Devon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PHX Minerals 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.| PHX Minerals vs. Devon Energy | PHX Minerals vs. ConocoPhillips | PHX Minerals vs. Occidental Petroleum | PHX Minerals vs. Permian Resources |
| Devon Energy vs. Coterra Energy | Devon Energy vs. Diamondback Energy | Devon Energy vs. EOG Resources | Devon Energy vs. ConocoPhillips |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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