Correlation Between Dream Industrial and Exxon
Can any of the company-specific risk be diversified away by investing in both Dream Industrial 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 Dream Industrial and Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dream Industrial Real and EXXON MOBIL CDR, you can compare the effects of market volatilities on Dream Industrial 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 Dream Industrial with a short position of Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Industrial and Exxon.
Diversification Opportunities for Dream Industrial and Exxon
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dream and Exxon is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dream Industrial Real 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 Dream Industrial 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 Dream Industrial Real 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 Dream Industrial i.e., Dream Industrial and Exxon go up and down completely randomly.
Pair Corralation between Dream Industrial and Exxon
Assuming the 90 days trading horizon Dream Industrial Real is expected to under-perform the Exxon. But the stock apears to be less risky and, when comparing its historical volatility, Dream Industrial Real is 1.32 times less risky than Exxon. The stock trades about -0.1 of its potential returns per unit of risk. The EXXON MOBIL CDR is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 2,011 in EXXON MOBIL CDR on November 6, 2024 and sell it today you would lose (22.00) from holding EXXON MOBIL CDR or give up 1.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dream Industrial Real vs. EXXON MOBIL CDR
Performance |
| Timeline |
| Dream Industrial Real |
| EXXON MOBIL CDR |
Dream Industrial and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dream Industrial and Exxon
The main advantage of trading using opposite Dream Industrial and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Industrial 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.| Dream Industrial vs. Granite Real Estate | Dream Industrial vs. NorthWest Healthcare Properties | Dream Industrial vs. Choice Properties Real | Dream Industrial vs. Canadian Apartment Properties |
| Exxon vs. Diversified Royalty Corp | Exxon vs. Farstarcap Investment Corp | Exxon vs. Westshore Terminals Investment | Exxon vs. Maple Leaf Foods |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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