Correlation Between Financial and Exxon
Can any of the company-specific risk be diversified away by investing in both 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 Financial and Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial 15 Split and EXXON MOBIL CDR, you can compare the effects of market volatilities on 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 Financial with a short position of Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and Exxon.
Diversification Opportunities for Financial and Exxon
Very weak diversification
The 3 months correlation between Financial and Exxon is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split 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 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 Financial 15 Split 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 Financial i.e., Financial and Exxon go up and down completely randomly.
Pair Corralation between Financial and Exxon
Assuming the 90 days trading horizon Financial 15 Split is expected to generate 0.18 times more return on investment than Exxon. However, Financial 15 Split is 5.7 times less risky than Exxon. It trades about 0.25 of its potential returns per unit of risk. EXXON MOBIL CDR is currently generating about 0.0 per unit of risk. If you would invest 963.00 in Financial 15 Split on September 3, 2024 and sell it today you would earn a total of 96.00 from holding Financial 15 Split or generate 9.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial 15 Split vs. EXXON MOBIL CDR
Performance |
| Timeline |
| Financial 15 Split |
| EXXON MOBIL CDR |
Financial and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial and Exxon
The main advantage of trading using opposite Financial and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 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.| Financial vs. North American Financial | Financial vs. Dividend 15 Split | Financial vs. Dividend Growth Split | Financial vs. Dividend 15 Split |
| Exxon vs. Cogeco Communications | Exxon vs. Quipt Home Medical | Exxon vs. Rocky Mountain Liquor | Exxon vs. Datable Technology Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |