Correlation Between Definity Financial and Exxon
Can any of the company-specific risk be diversified away by investing in both Definity Financial and Exxon 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 Definity Financial and Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Definity Financial Corp and EXXON MOBIL CDR, you can compare the effects of market volatilities on Definity Financial and Exxon 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 Definity Financial with a short position of Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Definity Financial and Exxon.
Diversification Opportunities for Definity Financial and Exxon
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Definity and Exxon is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Definity Financial Corp and EXXON MOBIL CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXXON MOBIL CDR and Definity Financial 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 Definity Financial Corp are associated (or correlated) with Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXXON MOBIL CDR has no effect on the direction of Definity Financial i.e., Definity Financial and Exxon go up and down completely randomly.
Pair Corralation between Definity Financial and Exxon
Assuming the 90 days trading horizon Definity Financial Corp is expected to generate 1.14 times more return on investment than Exxon. However, Definity Financial is 1.14 times more volatile than EXXON MOBIL CDR. It trades about 0.06 of its potential returns per unit of risk. EXXON MOBIL CDR is currently generating about -0.46 per unit of risk. If you would invest 5,693 in Definity Financial Corp on September 19, 2024 and sell it today you would earn a total of 81.00 from holding Definity Financial Corp or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Definity Financial Corp vs. EXXON MOBIL CDR
Performance |
| Timeline |
| Definity Financial Corp |
| EXXON MOBIL CDR |
Definity Financial and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Definity Financial and Exxon
The main advantage of trading using opposite Definity Financial and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Definity Financial position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon's long position.| Definity Financial vs. Topaz Energy Corp | Definity Financial vs. iShares Canadian HYBrid | Definity Financial vs. Altagas Cum Red | Definity Financial vs. RBC Discount Bond |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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