Correlation Between Freedom Holding and Exxon
Can any of the company-specific risk be diversified away by investing in both Freedom Holding 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 Freedom Holding and Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Holding Corp and Exxon Mobil Corp, you can compare the effects of market volatilities on Freedom Holding 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 Freedom Holding with a short position of Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Holding and Exxon.
Diversification Opportunities for Freedom Holding and Exxon
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Freedom and Exxon is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Holding Corp and Exxon Mobil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil Corp and Freedom Holding 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 Freedom Holding 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 Corp has no effect on the direction of Freedom Holding i.e., Freedom Holding and Exxon go up and down completely randomly.
Pair Corralation between Freedom Holding and Exxon
Given the investment horizon of 90 days Freedom Holding Corp is expected to generate 1.77 times more return on investment than Exxon. However, Freedom Holding is 1.77 times more volatile than Exxon Mobil Corp. It trades about 0.13 of its potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.12 per unit of risk. If you would invest 11,138 in Freedom Holding Corp on August 26, 2024 and sell it today you would earn a total of 609.00 from holding Freedom Holding Corp or generate 5.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freedom Holding Corp vs. Exxon Mobil Corp
Performance |
| Timeline |
| Freedom Holding Corp |
| Exxon Mobil Corp |
Freedom Holding and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Holding and Exxon
The main advantage of trading using opposite Freedom Holding and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Holding 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.| Freedom Holding vs. Nomura Holdings ADR | Freedom Holding vs. Scully Royalty | Freedom Holding vs. Oppenheimer Holdings | Freedom Holding vs. Houlihan Lokey |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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