Correlation Between Devon Energy and SandRidge Energy
Can any of the company-specific risk be diversified away by investing in both Devon Energy and SandRidge 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 Devon Energy and SandRidge Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Devon Energy and SandRidge Energy, you can compare the effects of market volatilities on Devon Energy and SandRidge 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 Devon Energy with a short position of SandRidge Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Devon Energy and SandRidge Energy.
Diversification Opportunities for Devon Energy and SandRidge Energy
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Devon and SandRidge is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Devon Energy and SandRidge Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SandRidge Energy 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 SandRidge Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SandRidge Energy has no effect on the direction of Devon Energy i.e., Devon Energy and SandRidge Energy go up and down completely randomly.
Pair Corralation between Devon Energy and SandRidge Energy
Considering the 90-day investment horizon Devon Energy is expected to under-perform the SandRidge Energy. In addition to that, Devon Energy is 1.05 times more volatile than SandRidge Energy. It trades about -0.02 of its total potential returns per unit of risk. SandRidge Energy is currently generating about 0.0 per unit of volatility. If you would invest 1,277 in SandRidge Energy on March 24, 2025 and sell it today you would lose (86.00) from holding SandRidge Energy or give up 6.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Devon Energy vs. SandRidge Energy
Performance |
| Timeline |
| Devon Energy |
| SandRidge Energy |
Devon Energy and SandRidge Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Devon Energy and SandRidge Energy
The main advantage of trading using opposite Devon Energy and SandRidge Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Devon Energy position performs unexpectedly, SandRidge 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 SandRidge Energy will offset losses from the drop in SandRidge Energy's long position.| Devon Energy vs. Antero Resources Corp | Devon Energy vs. Empire Petroleum Corp | Devon Energy vs. SandRidge Energy | Devon Energy vs. SM Energy Co |
| SandRidge Energy vs. Range Resources Corp | SandRidge Energy vs. SM Energy Co | SandRidge Energy vs. Northern Oil Gas |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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