Correlation Between SM Energy and Devon Energy
Can any of the company-specific risk be diversified away by investing in both SM Energy 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 SM Energy and Devon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SM Energy Co and Devon Energy, you can compare the effects of market volatilities on SM Energy 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 SM Energy with a short position of Devon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of SM Energy and Devon Energy.
Diversification Opportunities for SM Energy and Devon Energy
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SM Energy and Devon is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding SM Energy Co and Devon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Devon Energy and SM 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 SM Energy Co 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 SM Energy i.e., SM Energy and Devon Energy go up and down completely randomly.
Pair Corralation between SM Energy and Devon Energy
Allowing for the 90-day total investment horizon SM Energy is expected to generate 4.76 times less return on investment than Devon Energy. In addition to that, SM Energy is 1.3 times more volatile than Devon Energy. It trades about 0.04 of its total potential returns per unit of risk. Devon Energy is currently generating about 0.26 per unit of volatility. If you would invest 4,905 in Devon Energy on January 25, 2024 and sell it today you would earn a total of 305.00 from holding Devon Energy or generate 6.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SM Energy Co vs. Devon Energy
Performance |
| Timeline |
| SM Energy |
| Devon Energy |
SM Energy and Devon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SM Energy and Devon Energy
The main advantage of trading using opposite SM Energy and Devon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SM Energy 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.| SM Energy vs. Vital Energy | SM Energy vs. Permian Resources | SM Energy vs. Matador Resources | SM Energy vs. Obsidian Energy |
| Devon Energy vs. Coterra Energy | Devon Energy vs. Diamondback Energy | Devon Energy vs. EOG Resources | Devon Energy vs. ConocoPhillips |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |