Correlation Between Exxon and Cineplex
Can any of the company-specific risk be diversified away by investing in both Exxon and Cineplex 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 Exxon and Cineplex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EXXON MOBIL CDR and Cineplex, you can compare the effects of market volatilities on Exxon and Cineplex 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 Exxon with a short position of Cineplex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Cineplex.
Diversification Opportunities for Exxon and Cineplex
Excellent diversification
The 3 months correlation between Exxon and Cineplex is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding EXXON MOBIL CDR and Cineplex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cineplex and Exxon 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 EXXON MOBIL CDR are associated (or correlated) with Cineplex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cineplex has no effect on the direction of Exxon i.e., Exxon and Cineplex go up and down completely randomly.
Pair Corralation between Exxon and Cineplex
Assuming the 90 days trading horizon Exxon is expected to generate 2.33 times less return on investment than Cineplex. In addition to that, Exxon is 2.34 times more volatile than Cineplex. It trades about 0.01 of its total potential returns per unit of risk. Cineplex is currently generating about 0.04 per unit of volatility. If you would invest 804.00 in Cineplex on September 3, 2024 and sell it today you would earn a total of 287.00 from holding Cineplex or generate 35.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.9% |
| Values | Daily Returns |
EXXON MOBIL CDR vs. Cineplex
Performance |
| Timeline |
| EXXON MOBIL CDR |
| Cineplex |
Exxon and Cineplex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Cineplex
The main advantage of trading using opposite Exxon and Cineplex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, Cineplex 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 Cineplex will offset losses from the drop in Cineplex's long position.| Exxon vs. Cogeco Communications | Exxon vs. Quipt Home Medical | Exxon vs. Rocky Mountain Liquor | Exxon vs. Datable Technology Corp |
| Cineplex vs. Air Canada | Cineplex vs. BlackBerry | Cineplex vs. Suncor Energy | Cineplex vs. Drone Delivery Canada |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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