Correlation Between Highwood Asset and Exxon
Can any of the company-specific risk be diversified away by investing in both Highwood Asset 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 Highwood Asset and Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highwood Asset Management and EXXON MOBIL CDR, you can compare the effects of market volatilities on Highwood Asset 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 Highwood Asset with a short position of Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highwood Asset and Exxon.
Diversification Opportunities for Highwood Asset and Exxon
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Highwood and Exxon is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Highwood Asset Management 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 Highwood Asset 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 Highwood Asset Management 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 Highwood Asset i.e., Highwood Asset and Exxon go up and down completely randomly.
Pair Corralation between Highwood Asset and Exxon
Assuming the 90 days horizon Highwood Asset Management is expected to generate 2.31 times more return on investment than Exxon. However, Highwood Asset is 2.31 times more volatile than EXXON MOBIL CDR. It trades about -0.18 of its potential returns per unit of risk. EXXON MOBIL CDR is currently generating about -0.67 per unit of risk. If you would invest 610.00 in Highwood Asset Management on September 23, 2024 and sell it today you would lose (55.00) from holding Highwood Asset Management or give up 9.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highwood Asset Management vs. EXXON MOBIL CDR
Performance |
| Timeline |
| Highwood Asset Management |
| EXXON MOBIL CDR |
Highwood Asset and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highwood Asset and Exxon
The main advantage of trading using opposite Highwood Asset and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highwood Asset 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.| Highwood Asset vs. Orca Energy Group | Highwood Asset vs. Rogers Communications | Highwood Asset vs. Aclara Resources | Highwood Asset vs. Buhler Industries |
| Exxon vs. Data Communications Management | Exxon vs. Nova Leap Health | Exxon vs. Arbor Metals Corp | Exxon vs. TGS Esports |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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