Correlation Between Exxon and Bionomics
Can any of the company-specific risk be diversified away by investing in both Exxon and Bionomics 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 Bionomics 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 Bionomics Ltd ADR, you can compare the effects of market volatilities on Exxon and Bionomics 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 Bionomics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Bionomics.
Diversification Opportunities for Exxon and Bionomics
Excellent diversification
The 3 months correlation between Exxon and Bionomics is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Bionomics Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bionomics ADR 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 Bionomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bionomics ADR has no effect on the direction of Exxon i.e., Exxon and Bionomics go up and down completely randomly.
Pair Corralation between Exxon and Bionomics
Considering the 90-day investment horizon Exxon is expected to generate 5.0 times less return on investment than Bionomics. But when comparing it to its historical volatility, Exxon Mobil Corp is 17.24 times less risky than Bionomics. It trades about 0.05 of its potential returns per unit of risk. Bionomics Ltd ADR is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 69.00 in Bionomics Ltd ADR on August 24, 2024 and sell it today you would lose (41.00) from holding Bionomics Ltd ADR or give up 59.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. Bionomics Ltd ADR
Performance |
| Timeline |
| Exxon Mobil Corp |
| Bionomics ADR |
Exxon and Bionomics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Bionomics
The main advantage of trading using opposite Exxon and Bionomics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, Bionomics 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 Bionomics will offset losses from the drop in Bionomics' long position.| Exxon vs. Shell PLC ADR | Exxon vs. BP PLC ADR | Exxon vs. Suncor Energy | Exxon vs. Petroleo Brasileiro Petrobras |
| Bionomics vs. Accustem Sciences | Bionomics vs. Scisparc | Bionomics vs. Anebulo Pharmaceuticals | Bionomics vs. Pmv Pharmaceuticals |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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