Correlation Between Exxon and WisdomTree LargeCap
Can any of the company-specific risk be diversified away by investing in both Exxon and WisdomTree LargeCap 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 WisdomTree LargeCap 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 WisdomTree LargeCap Dividend, you can compare the effects of market volatilities on Exxon and WisdomTree LargeCap 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 WisdomTree LargeCap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and WisdomTree LargeCap.
Diversification Opportunities for Exxon and WisdomTree LargeCap
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Exxon and WisdomTree is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and WisdomTree LargeCap Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree LargeCap 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 WisdomTree LargeCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree LargeCap has no effect on the direction of Exxon i.e., Exxon and WisdomTree LargeCap go up and down completely randomly.
Pair Corralation between Exxon and WisdomTree LargeCap
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 1.45 times more return on investment than WisdomTree LargeCap. However, Exxon is 1.45 times more volatile than WisdomTree LargeCap Dividend. It trades about 0.32 of its potential returns per unit of risk. WisdomTree LargeCap Dividend is currently generating about 0.13 per unit of risk. If you would invest 10,630 in Exxon Mobil Corp on October 23, 2024 and sell it today you would earn a total of 602.00 from holding Exxon Mobil Corp or generate 5.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. WisdomTree LargeCap Dividend
Performance |
| Timeline |
| Exxon Mobil Corp |
| WisdomTree LargeCap |
Exxon and WisdomTree LargeCap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and WisdomTree LargeCap
The main advantage of trading using opposite Exxon and WisdomTree LargeCap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, WisdomTree LargeCap 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 WisdomTree LargeCap will offset losses from the drop in WisdomTree LargeCap's long position.| Exxon vs. Shell PLC ADR | Exxon vs. BP PLC ADR | Exxon vs. Suncor Energy | Exxon vs. Petroleo Brasileiro Petrobras |
| WisdomTree LargeCap vs. FT Vest Equity | WisdomTree LargeCap vs. Northern Lights | WisdomTree LargeCap vs. Dimensional International High | WisdomTree LargeCap vs. JPMorgan Fundamental Data |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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