Correlation Between Target 2030 and Exxon
Can any of the company-specific risk be diversified away by investing in both Target 2030 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 Target 2030 and Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target 2030 Fund and Exxon Mobil Corp, you can compare the effects of market volatilities on Target 2030 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 Target 2030 with a short position of Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target 2030 and Exxon.
Diversification Opportunities for Target 2030 and Exxon
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Target and Exxon is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Target 2030 Fund 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 Target 2030 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 Target 2030 Fund 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 Target 2030 i.e., Target 2030 and Exxon go up and down completely randomly.
Pair Corralation between Target 2030 and Exxon
Assuming the 90 days horizon Target 2030 Fund is expected to generate 0.33 times more return on investment than Exxon. However, Target 2030 Fund is 3.04 times less risky than Exxon. It trades about 0.27 of its potential returns per unit of risk. Exxon Mobil Corp is currently generating about -0.01 per unit of risk. If you would invest 1,406 in Target 2030 Fund on November 3, 2024 and sell it today you would earn a total of 33.00 from holding Target 2030 Fund or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Target 2030 Fund vs. Exxon Mobil Corp
Performance |
| Timeline |
| Target 2030 Fund |
| Exxon Mobil Corp |
Target 2030 and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target 2030 and Exxon
The main advantage of trading using opposite Target 2030 and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target 2030 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.| Target 2030 vs. Touchstone Ultra Short | Target 2030 vs. Nuveen Short Term | Target 2030 vs. Siit Ultra Short | Target 2030 vs. Fidelity Flex Servative |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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