Correlation Between Exxon Mobil and Unity Software
Can any of the company-specific risk be diversified away by investing in both Exxon Mobil and Unity Software 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 Exxon Mobil and Unity Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exxon Mobil and Unity Software, you can compare the effects of market volatilities on Exxon Mobil and Unity Software 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 Exxon Mobil with a short position of Unity Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon Mobil and Unity Software.
Diversification Opportunities for Exxon Mobil and Unity Software
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Exxon and Unity is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil and Unity Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Software and Exxon Mobil 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 Exxon Mobil are associated (or correlated) with Unity Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Software has no effect on the direction of Exxon Mobil i.e., Exxon Mobil and Unity Software go up and down completely randomly.
Pair Corralation between Exxon Mobil and Unity Software
Assuming the 90 days trading horizon Exxon Mobil is expected to generate 0.36 times more return on investment than Unity Software. However, Exxon Mobil is 2.76 times less risky than Unity Software. It trades about 0.04 of its potential returns per unit of risk. Unity Software is currently generating about 0.01 per unit of risk. If you would invest 6,802 in Exxon Mobil on September 3, 2024 and sell it today you would earn a total of 2,072 from holding Exxon Mobil or generate 30.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Exxon Mobil vs. Unity Software
Performance |
| Timeline |
| Exxon Mobil |
| Unity Software |
Exxon Mobil and Unity Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon Mobil and Unity Software
The main advantage of trading using opposite Exxon Mobil and Unity Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon Mobil position performs unexpectedly, Unity Software 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 Unity Software will offset losses from the drop in Unity Software's long position.| Exxon Mobil vs. Capital One Financial | Exxon Mobil vs. Bank of America | Exxon Mobil vs. Automatic Data Processing | Exxon Mobil vs. Iron Mountain Incorporated |
| Unity Software vs. United States Steel | Unity Software vs. Agilent Technologies | Unity Software vs. Unifique Telecomunicaes SA | Unity Software vs. Palantir Technologies |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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