Correlation Between IShares Core and Exxon
Can any of the company-specific risk be diversified away by investing in both IShares Core 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 IShares Core and Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core MSCI and Exxon Mobil Corp, you can compare the effects of market volatilities on IShares Core 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 IShares Core with a short position of Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Exxon.
Diversification Opportunities for IShares Core and Exxon
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IShares and Exxon is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI 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 IShares Core 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 iShares Core MSCI 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 IShares Core i.e., IShares Core and Exxon go up and down completely randomly.
Pair Corralation between IShares Core and Exxon
Given the investment horizon of 90 days iShares Core MSCI is expected to generate 0.86 times more return on investment than Exxon. However, iShares Core MSCI is 1.17 times less risky than Exxon. It trades about 0.05 of its potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.04 per unit of risk. If you would invest 6,123 in iShares Core MSCI on September 5, 2024 and sell it today you would earn a total of 423.00 from holding iShares Core MSCI or generate 6.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core MSCI vs. Exxon Mobil Corp
Performance |
| Timeline |
| iShares Core MSCI |
| Exxon Mobil Corp |
IShares Core and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Exxon
The main advantage of trading using opposite IShares Core and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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.| IShares Core vs. iShares Core MSCI | IShares Core vs. iShares Core International | IShares Core vs. iShares Core 10 | IShares Core vs. iShares MSCI Emerging |
| Exxon vs. Shell PLC ADR | Exxon vs. TotalEnergies SE ADR | Exxon vs. Equinor ASA ADR | Exxon vs. Petrleo Brasileiro SA |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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