Correlation Between PetroShale and Devon Energy
Can any of the company-specific risk be diversified away by investing in both PetroShale 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 PetroShale and Devon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PetroShale and Devon Energy, you can compare the effects of market volatilities on PetroShale 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 PetroShale with a short position of Devon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroShale and Devon Energy.
Diversification Opportunities for PetroShale and Devon Energy
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PetroShale and Devon is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding PetroShale and Devon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Devon Energy and PetroShale 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 PetroShale 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 PetroShale i.e., PetroShale and Devon Energy go up and down completely randomly.
Pair Corralation between PetroShale and Devon Energy
Assuming the 90 days horizon PetroShale is expected to generate 1.59 times more return on investment than Devon Energy. However, PetroShale is 1.59 times more volatile than Devon Energy. It trades about -0.01 of its potential returns per unit of risk. Devon Energy is currently generating about -0.04 per unit of risk. If you would invest 39.00 in PetroShale on September 3, 2024 and sell it today you would lose (11.00) from holding PetroShale or give up 28.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PetroShale vs. Devon Energy
Performance |
| Timeline |
| PetroShale |
| Devon Energy |
PetroShale and Devon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroShale and Devon Energy
The main advantage of trading using opposite PetroShale and Devon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroShale 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.| PetroShale vs. Dno ASA | PetroShale vs. Horizon Oil Limited | PetroShale vs. Enwell Energy plc | PetroShale vs. Tullow Oil plc |
| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |