Correlation Between Devon Energy and Comcast Corp

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

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

Diversification Opportunities for Devon Energy and Comcast Corp

-0.64

Correlation Coefficient

Devon Energy  Comcast Corp

Excellent diversification

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

Pair Corralation between Devon Energy and Comcast Corp

Considering the 90-day investment horizon Devon Energy is expected to generate 0.99 times more return on investment than Comcast Corp. However, Devon Energy is 1.01 times less risky than Comcast Corp. It trades about 0.29 of its potential returns per unit of risk. Comcast Corp is currently generating about -0.2 per unit of risk. If you would invest  4,879  in Devon Energy on January 26, 2024 and sell it today you would earn a total of  331.00  from holding Devon Energy or generate 6.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Devon Energy  vs.  Comcast Corp

Devon Energy

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Devon Energy are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Devon Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Comcast Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Comcast Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Devon Energy and Comcast Corp

The main advantage of trading using opposite Devon Energy and Comcast Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Devon Energy position performs unexpectedly, Comcast Corp 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 Comcast Corp will offset losses from the drop in Comcast Corp's long position.

The idea behind Devon Energy and Comcast Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.