Correlation Between Exxon and FT Cboe
Can any of the company-specific risk be diversified away by investing in both Exxon and FT Cboe 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 FT Cboe 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 FT Cboe Vest, you can compare the effects of market volatilities on Exxon and FT Cboe 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 FT Cboe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and FT Cboe.
Diversification Opportunities for Exxon and FT Cboe
Poor diversification
The 3 months correlation between Exxon and BUFD is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and FT Cboe Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Cboe Vest 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 FT Cboe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Cboe Vest has no effect on the direction of Exxon i.e., Exxon and FT Cboe go up and down completely randomly.
Pair Corralation between Exxon and FT Cboe
Considering the 90-day investment horizon Exxon is expected to generate 1.22 times less return on investment than FT Cboe. In addition to that, Exxon is 3.27 times more volatile than FT Cboe Vest. It trades about 0.05 of its total potential returns per unit of risk. FT Cboe Vest is currently generating about 0.19 per unit of volatility. If you would invest 2,524 in FT Cboe Vest on August 30, 2024 and sell it today you would earn a total of 38.00 from holding FT Cboe Vest or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Exxon Mobil Corp vs. FT Cboe Vest
Performance |
| Timeline |
| Exxon Mobil Corp |
| FT Cboe Vest |
Exxon and FT Cboe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and FT Cboe
The main advantage of trading using opposite Exxon and FT Cboe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, FT Cboe 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 FT Cboe will offset losses from the drop in FT Cboe's long position.| Exxon vs. BP PLC ADR | Exxon vs. Shell PLC ADR | Exxon vs. Petroleo Brasileiro Petrobras | Exxon vs. Suncor Energy |
| FT Cboe vs. First Trust Cboe | FT Cboe vs. FT Cboe Vest | FT Cboe vs. FT Cboe Vest | FT Cboe vs. First Trust Exchange Traded |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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