Correlation Between Exxon and IShares VII
Can any of the company-specific risk be diversified away by investing in both Exxon and IShares VII 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 IShares VII 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 iShares VII Public, you can compare the effects of market volatilities on Exxon and IShares VII 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 IShares VII. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and IShares VII.
Diversification Opportunities for Exxon and IShares VII
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Exxon and IShares is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and iShares VII Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares VII Public 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 IShares VII. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares VII Public has no effect on the direction of Exxon i.e., Exxon and IShares VII go up and down completely randomly.
Pair Corralation between Exxon and IShares VII
Considering the 90-day investment horizon Exxon Mobil Corp is expected to under-perform the IShares VII. In addition to that, Exxon is 1.33 times more volatile than iShares VII Public. It trades about -0.19 of its total potential returns per unit of risk. iShares VII Public is currently generating about 0.09 per unit of volatility. If you would invest 61,884 in iShares VII Public on September 12, 2024 and sell it today you would earn a total of 1,883 from holding iShares VII Public or generate 3.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. iShares VII Public
Performance |
| Timeline |
| Exxon Mobil Corp |
| iShares VII Public |
Exxon and IShares VII Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and IShares VII
The main advantage of trading using opposite Exxon and IShares VII positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, IShares VII 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 IShares VII will offset losses from the drop in IShares VII's long position.| Exxon vs. Shell PLC ADR | Exxon vs. BP PLC ADR | Exxon vs. Suncor Energy | Exxon vs. Petroleo Brasileiro Petrobras |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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