Correlation Between Devon Energy and Expand Energy

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Devon Energy and Expand 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 Devon Energy and Expand Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Devon Energy and Expand Energy, you can compare the effects of market volatilities on Devon Energy and Expand 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 Devon Energy with a short position of Expand Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Devon Energy and Expand Energy.

Diversification Opportunities for Devon Energy and Expand Energy

DevonExpandDiversified AwayDevonExpandDiversified Away100%
-0.64
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Devon and Expand is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Devon Energy and Expand Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expand Energy 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 Expand Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expand Energy has no effect on the direction of Devon Energy i.e., Devon Energy and Expand Energy go up and down completely randomly.

Pair Corralation between Devon Energy and Expand Energy

Considering the 90-day investment horizon Devon Energy is expected to under-perform the Expand Energy. But the stock apears to be less risky and, when comparing its historical volatility, Devon Energy is 1.37 times less risky than Expand Energy. The stock trades about -0.23 of its potential returns per unit of risk. The Expand Energy is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  6,370  in Expand Energy on September 20, 2024 and sell it today you would earn a total of  2,475  from holding Expand Energy or generate 38.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Devon Energy  vs.  Expand Energy

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -10010203040
JavaScript chart by amCharts 3.21.15DVN EXEEW
       Timeline  
Devon Energy 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Devon Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec32343638404244
Expand Energy 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Expand Energy are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Expand Energy showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec65707580859095

Devon Energy and Expand Energy Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.01-2.25-1.5-0.740.00.641.281.922.56 0.060.080.100.12
JavaScript chart by amCharts 3.21.15DVN EXEEW
       Returns  

Pair Trading with Devon Energy and Expand Energy

The main advantage of trading using opposite Devon Energy and Expand Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Devon Energy position performs unexpectedly, Expand 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 Expand Energy will offset losses from the drop in Expand Energy's long position.
The idea behind Devon Energy and Expand Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

Other Complementary Tools

Commodity Channel
Use Commodity Channel Index to analyze current equity momentum
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Share Portfolio
Track or share privately all of your investments from the convenience of any device