Correlation Between Everyday People and Exxon
Can any of the company-specific risk be diversified away by investing in both Everyday People 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 Everyday People and Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Everyday People Financial and EXXON MOBIL CDR, you can compare the effects of market volatilities on Everyday People 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 Everyday People with a short position of Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everyday People and Exxon.
Diversification Opportunities for Everyday People and Exxon
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Everyday and Exxon is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Everyday People Financial 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 Everyday People 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 Everyday People Financial 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 Everyday People i.e., Everyday People and Exxon go up and down completely randomly.
Pair Corralation between Everyday People and Exxon
Assuming the 90 days horizon Everyday People Financial is expected to generate 2.89 times more return on investment than Exxon. However, Everyday People is 2.89 times more volatile than EXXON MOBIL CDR. It trades about 0.05 of its potential returns per unit of risk. EXXON MOBIL CDR is currently generating about 0.05 per unit of risk. If you would invest 38.00 in Everyday People Financial on August 30, 2024 and sell it today you would earn a total of 1.00 from holding Everyday People Financial or generate 2.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Everyday People Financial vs. EXXON MOBIL CDR
Performance |
| Timeline |
| Everyday People Financial |
| EXXON MOBIL CDR |
Everyday People and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Everyday People and Exxon
The main advantage of trading using opposite Everyday People and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everyday People 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.| Everyday People vs. American Hotel Income | Everyday People vs. Maple Peak Investments | Everyday People vs. Westshore Terminals Investment | Everyday People vs. Brookfield Investments |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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