Correlation Between Exxon and American Shipping
Can any of the company-specific risk be diversified away by investing in both Exxon and American Shipping 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 American Shipping 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 American Shipping, you can compare the effects of market volatilities on Exxon and American Shipping 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 American Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and American Shipping.
Diversification Opportunities for Exxon and American Shipping
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Exxon and American is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and American Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Shipping 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 American Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Shipping has no effect on the direction of Exxon i.e., Exxon and American Shipping go up and down completely randomly.
Pair Corralation between Exxon and American Shipping
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.89 times more return on investment than American Shipping. However, Exxon Mobil Corp is 1.13 times less risky than American Shipping. It trades about 0.08 of its potential returns per unit of risk. American Shipping is currently generating about -0.25 per unit of risk. If you would invest 11,583 in Exxon Mobil Corp on September 1, 2024 and sell it today you would earn a total of 213.00 from holding Exxon Mobil Corp or generate 1.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Exxon Mobil Corp vs. American Shipping
Performance |
| Timeline |
| Exxon Mobil Corp |
| American Shipping |
Exxon and American Shipping Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and American Shipping
The main advantage of trading using opposite Exxon and American Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, American Shipping 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 American Shipping will offset losses from the drop in American Shipping's long position.The idea behind Exxon Mobil Corp and American Shipping 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.| American Shipping vs. Hapag Lloyd Aktiengesellschaft | American Shipping vs. AP Moeller Maersk AS | American Shipping vs. AP Mller | American Shipping vs. COSCO SHIPPING Holdings |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |