Correlation Between Exxon and VictoryShares WestEnd
Can any of the company-specific risk be diversified away by investing in both Exxon and VictoryShares WestEnd 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 VictoryShares WestEnd 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 VictoryShares WestEnd Economic, you can compare the effects of market volatilities on Exxon and VictoryShares WestEnd 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 VictoryShares WestEnd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and VictoryShares WestEnd.
Diversification Opportunities for Exxon and VictoryShares WestEnd
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Exxon and VictoryShares is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and VictoryShares WestEnd Economic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares WestEnd 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 VictoryShares WestEnd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares WestEnd has no effect on the direction of Exxon i.e., Exxon and VictoryShares WestEnd go up and down completely randomly.
Pair Corralation between Exxon and VictoryShares WestEnd
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 3.44 times more return on investment than VictoryShares WestEnd. However, Exxon is 3.44 times more volatile than VictoryShares WestEnd Economic. It trades about 0.02 of its potential returns per unit of risk. VictoryShares WestEnd Economic is currently generating about 0.05 per unit of risk. If you would invest 10,693 in Exxon Mobil Corp on September 1, 2024 and sell it today you would earn a total of 1,103 from holding Exxon Mobil Corp or generate 10.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 25.05% |
| Values | Daily Returns |
Exxon Mobil Corp vs. VictoryShares WestEnd Economic
Performance |
| Timeline |
| Exxon Mobil Corp |
| VictoryShares WestEnd |
Exxon and VictoryShares WestEnd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and VictoryShares WestEnd
The main advantage of trading using opposite Exxon and VictoryShares WestEnd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, VictoryShares WestEnd 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 VictoryShares WestEnd will offset losses from the drop in VictoryShares WestEnd's long position.The idea behind Exxon Mobil Corp and VictoryShares WestEnd Economic 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.| VictoryShares WestEnd vs. BlackRock High Yield | VictoryShares WestEnd vs. Hartford Short Duration | VictoryShares WestEnd vs. SSGA Active Trust | VictoryShares WestEnd vs. Aquagold International |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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