Correlation Between Exxon and Cashmere Valley
Can any of the company-specific risk be diversified away by investing in both Exxon and Cashmere Valley 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 Cashmere Valley 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 Cashmere Valley Bank, you can compare the effects of market volatilities on Exxon and Cashmere Valley 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 Cashmere Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Cashmere Valley.
Diversification Opportunities for Exxon and Cashmere Valley
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Exxon and Cashmere is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Cashmere Valley Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cashmere Valley Bank 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 Cashmere Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cashmere Valley Bank has no effect on the direction of Exxon i.e., Exxon and Cashmere Valley go up and down completely randomly.
Pair Corralation between Exxon and Cashmere Valley
Considering the 90-day investment horizon Exxon is expected to generate 2.28 times less return on investment than Cashmere Valley. In addition to that, Exxon is 1.35 times more volatile than Cashmere Valley Bank. It trades about 0.1 of its total potential returns per unit of risk. Cashmere Valley Bank is currently generating about 0.31 per unit of volatility. If you would invest 5,716 in Cashmere Valley Bank on December 11, 2024 and sell it today you would earn a total of 778.00 from holding Cashmere Valley Bank or generate 13.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.68% |
| Values | Daily Returns |
Exxon Mobil Corp vs. Cashmere Valley Bank
Performance |
| Timeline |
| Exxon Mobil Corp |
| Cashmere Valley Bank |
Exxon and Cashmere Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Cashmere Valley
The main advantage of trading using opposite Exxon and Cashmere Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, Cashmere Valley 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 Cashmere Valley will offset losses from the drop in Cashmere Valley's long position.| Exxon vs. Shell PLC ADR | ||
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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