Correlation Between Exxon and A SPAC
Can any of the company-specific risk be diversified away by investing in both Exxon and A SPAC 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 A SPAC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exxon Mobil Corp and A SPAC I, you can compare the effects of market volatilities on Exxon and A SPAC 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 A SPAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and A SPAC.
Diversification Opportunities for Exxon and A SPAC
Excellent diversification
The 3 months correlation between Exxon and ASCAU is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and A SPAC I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A SPAC I 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 Corp are associated (or correlated) with A SPAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A SPAC I has no effect on the direction of Exxon i.e., Exxon and A SPAC go up and down completely randomly.
Pair Corralation between Exxon and A SPAC
Considering the 90-day investment horizon Exxon is expected to generate 1.05 times less return on investment than A SPAC. But when comparing it to its historical volatility, Exxon Mobil Corp is 1.19 times less risky than A SPAC. It trades about 0.03 of its potential returns per unit of risk. A SPAC I is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,018 in A SPAC I on August 30, 2024 and sell it today you would earn a total of 61.00 from holding A SPAC I or generate 5.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 31.11% |
| Values | Daily Returns |
Exxon Mobil Corp vs. A SPAC I
Performance |
| Timeline |
| Exxon Mobil Corp |
| A SPAC I |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Exxon and A SPAC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and A SPAC
The main advantage of trading using opposite Exxon and A SPAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, A SPAC 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 A SPAC will offset losses from the drop in A SPAC's long position.The idea behind Exxon Mobil Corp and A SPAC I pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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