Correlation Between Roper Technologies, and Devon Energy
Can any of the company-specific risk be diversified away by investing in both Roper Technologies, 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 Roper Technologies, and Devon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roper Technologies, and Devon Energy, you can compare the effects of market volatilities on Roper Technologies, 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 Roper Technologies, with a short position of Devon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roper Technologies, and Devon Energy.
Diversification Opportunities for Roper Technologies, and Devon Energy
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Roper and Devon is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Roper Technologies, and Devon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Devon Energy and Roper Technologies, 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 Roper Technologies, 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 Roper Technologies, i.e., Roper Technologies, and Devon Energy go up and down completely randomly.
Pair Corralation between Roper Technologies, and Devon Energy
Assuming the 90 days trading horizon Roper Technologies, is expected to generate 126.89 times less return on investment than Devon Energy. But when comparing it to its historical volatility, Roper Technologies, is 103.01 times less risky than Devon Energy. It trades about 0.24 of its potential returns per unit of risk. Devon Energy is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 19,440 in Devon Energy on October 25, 2024 and sell it today you would earn a total of 2,487 from holding Devon Energy or generate 12.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Roper Technologies, vs. Devon Energy
Performance |
| Timeline |
| Roper Technologies, |
| Devon Energy |
Roper Technologies, and Devon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roper Technologies, and Devon Energy
The main advantage of trading using opposite Roper Technologies, and Devon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roper Technologies, 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.| Roper Technologies, vs. Warner Music Group | Roper Technologies, vs. Healthpeak Properties | Roper Technologies, vs. Elevance Health, | Roper Technologies, vs. ON Semiconductor |
| Devon Energy vs. Mangels Industrial SA | Devon Energy vs. Liberty Broadband | Devon Energy vs. Check Point Software | Devon Energy vs. Seagate Technology Holdings |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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