Correlation Between Exxon and Microbix Biosystems
Can any of the company-specific risk be diversified away by investing in both Exxon and Microbix Biosystems 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 Microbix Biosystems 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 Microbix Biosystems, you can compare the effects of market volatilities on Exxon and Microbix Biosystems 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 Microbix Biosystems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Microbix Biosystems.
Diversification Opportunities for Exxon and Microbix Biosystems
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Exxon and Microbix is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding EXXON MOBIL CDR and Microbix Biosystems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbix Biosystems 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 Microbix Biosystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microbix Biosystems has no effect on the direction of Exxon i.e., Exxon and Microbix Biosystems go up and down completely randomly.
Pair Corralation between Exxon and Microbix Biosystems
Assuming the 90 days trading horizon EXXON MOBIL CDR is expected to generate 0.35 times more return on investment than Microbix Biosystems. However, EXXON MOBIL CDR is 2.88 times less risky than Microbix Biosystems. It trades about -0.09 of its potential returns per unit of risk. Microbix Biosystems is currently generating about -0.16 per unit of risk. If you would invest 2,029 in EXXON MOBIL CDR on December 6, 2024 and sell it today you would lose (69.00) from holding EXXON MOBIL CDR or give up 3.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EXXON MOBIL CDR vs. Microbix Biosystems
Performance |
| Timeline |
| EXXON MOBIL CDR |
| Microbix Biosystems |
Exxon and Microbix Biosystems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Microbix Biosystems
The main advantage of trading using opposite Exxon and Microbix Biosystems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, Microbix Biosystems 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 Microbix Biosystems will offset losses from the drop in Microbix Biosystems' long position.| Exxon vs. Algonquin Power Utilities | ||
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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