Correlation Between Devon Energy and EnQuest PLC
Can any of the company-specific risk be diversified away by investing in both Devon Energy and EnQuest PLC 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 Devon Energy and EnQuest PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Devon Energy and EnQuest PLC, you can compare the effects of market volatilities on Devon Energy and EnQuest PLC 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 Devon Energy with a short position of EnQuest PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Devon Energy and EnQuest PLC.
Diversification Opportunities for Devon Energy and EnQuest PLC
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Devon and EnQuest is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Devon Energy and EnQuest PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EnQuest PLC and Devon Energy 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 Devon Energy are associated (or correlated) with EnQuest PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EnQuest PLC has no effect on the direction of Devon Energy i.e., Devon Energy and EnQuest PLC go up and down completely randomly.
Pair Corralation between Devon Energy and EnQuest PLC
Considering the 90-day investment horizon Devon Energy is expected to generate 2.08 times less return on investment than EnQuest PLC. But when comparing it to its historical volatility, Devon Energy is 2.51 times less risky than EnQuest PLC. It trades about 0.1 of its potential returns per unit of risk. EnQuest PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 14.00 in EnQuest PLC on December 2, 2024 and sell it today you would earn a total of 2.00 from holding EnQuest PLC or generate 14.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Devon Energy vs. EnQuest PLC
Performance |
Timeline |
Devon Energy |
EnQuest PLC |
Devon Energy and EnQuest PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Devon Energy and EnQuest PLC
The main advantage of trading using opposite Devon Energy and EnQuest PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Devon Energy position performs unexpectedly, EnQuest PLC 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 EnQuest PLC will offset losses from the drop in EnQuest PLC's long position.Devon Energy vs. Coterra Energy | Devon Energy vs. Diamondback Energy | Devon Energy vs. EOG Resources | Devon Energy vs. ConocoPhillips |
EnQuest PLC vs. ADX Energy | EnQuest PLC vs. Pine Cliff Energy | EnQuest PLC vs. AER Energy Resources | EnQuest PLC vs. Headwater Exploration |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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