Correlation Between Devon Energy and Antero Resources

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

Diversification Opportunities for Devon Energy and Antero Resources

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between Devon and Antero is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Devon Energy Corp and Antero Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antero Resources 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 Corp are associated (or correlated) with Antero Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antero Resources Corp has no effect on the direction of Devon Energy i.e., Devon Energy and Antero Resources go up and down completely randomly.

Pair Corralation between Devon Energy and Antero Resources

Considering the 90-day investment horizon Devon Energy is expected to generate 1.27 times less return on investment than Antero Resources. But when comparing it to its historical volatility, Devon Energy Corp is 1.2 times less risky than Antero Resources. It trades about 0.12 of its potential returns per unit of risk. Antero Resources Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  373.00  in Antero Resources Corp on July 3, 2022 and sell it today you would earn a total of  2,680  from holding Antero Resources Corp or generate 718.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.79%
ValuesDaily Returns

Devon Energy Corp  vs.  Antero Resources Corp

 Performance (%) 
       Timeline  
Devon Energy Corp 
Devon Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Devon Energy Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Devon Energy disclosed solid returns over the last few months and may actually be approaching a breakup point.

Devon Price Channel

Antero Resources Corp 
Antero Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Antero Resources Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Antero Resources may actually be approaching a critical reversion point that can send shares even higher in November 2022.

Antero Price Channel

Devon Energy and Antero Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Devon Energy and Antero Resources

The main advantage of trading using opposite Devon Energy and Antero Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Devon Energy position performs unexpectedly, Antero Resources 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 Antero Resources will offset losses from the drop in Antero Resources' long position.
Devon Energy vs. Amazon Inc
The idea behind Devon Energy Corp and Antero Resources 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.
Antero Resources vs. Amazon Inc
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 Shere Portfolio module to track or share privately all of your investments from the convenience of any device.

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