Correlation Between Jiayin and Devon Energy

Can any of the company-specific risk be diversified away by investing in both Jiayin 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 Jiayin and Devon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jiayin Group and Devon Energy, you can compare the effects of market volatilities on Jiayin 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 Jiayin with a short position of Devon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiayin and Devon Energy.

Diversification Opportunities for Jiayin and Devon Energy

0.15

Correlation Coefficient

Jiayin  Devon Energy

Average diversification

The 3 months correlation between Jiayin and Devon is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Jiayin Group and Devon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Devon Energy and Jiayin 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 Jiayin Group 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 Jiayin i.e., Jiayin and Devon Energy go up and down completely randomly.

Pair Corralation between Jiayin and Devon Energy

Given the investment horizon of 90 days Jiayin Group is expected to under-perform the Devon Energy. In addition to that, Jiayin is 1.94 times more volatile than Devon Energy. It trades about -0.05 of its total potential returns per unit of risk. Devon Energy is currently generating about -0.08 per unit of volatility. If you would invest  22,861  in Devon Energy on October 4, 2024 and sell it today you would lose (2,147) from holding Devon Energy or give up 9.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Jiayin Group  vs.  Devon Energy

Jiayin Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jiayin Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Devon Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Devon Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Jiayin and Devon Energy

The main advantage of trading using opposite Jiayin and Devon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jiayin 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.

The idea behind Jiayin Group and Devon 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.