Correlation Between Devon Energy and Canadian Natural
Can any of the company-specific risk be diversified away by investing in both Devon Energy and Canadian Natural 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 Canadian Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Devon Energy and Canadian Natural Resources, you can compare the effects of market volatilities on Devon Energy and Canadian Natural 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 Canadian Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Devon Energy and Canadian Natural.
Diversification Opportunities for Devon Energy and Canadian Natural
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Devon and Canadian is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Devon Energy and Canadian Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Natural Res 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 Canadian Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Natural Res has no effect on the direction of Devon Energy i.e., Devon Energy and Canadian Natural go up and down completely randomly.
Pair Corralation between Devon Energy and Canadian Natural
Considering the 90-day investment horizon Devon Energy is expected to generate 0.88 times more return on investment than Canadian Natural. However, Devon Energy is 1.14 times less risky than Canadian Natural. It trades about 0.28 of its potential returns per unit of risk. Canadian Natural Resources is currently generating about 0.19 per unit of risk. If you would invest 4,843 in Devon Energy on January 19, 2024 and sell it today you would earn a total of 324.00 from holding Devon Energy or generate 6.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Devon Energy vs. Canadian Natural Resources
Performance |
| Timeline |
| Devon Energy |
| Canadian Natural Res |
Devon Energy and Canadian Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Devon Energy and Canadian Natural
The main advantage of trading using opposite Devon Energy and Canadian Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Devon Energy position performs unexpectedly, Canadian Natural 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 Canadian Natural will offset losses from the drop in Canadian Natural's long position.| Devon Energy vs. Coterra Energy | Devon Energy vs. Diamondback Energy | Devon Energy vs. EOG Resources | Devon Energy vs. ConocoPhillips |
| Canadian Natural vs. Baytex Energy Corp | Canadian Natural vs. Vermilion Energy | Canadian Natural vs. Obsidian Energy | Canadian Natural vs. Ovintiv |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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