Correlation Between Exxon and WisdomTree Japan
Can any of the company-specific risk be diversified away by investing in both Exxon and WisdomTree Japan 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 Japan 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 Japan Hedged, you can compare the effects of market volatilities on Exxon and WisdomTree Japan 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 Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and WisdomTree Japan.
Diversification Opportunities for Exxon and WisdomTree Japan
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Exxon and WisdomTree is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and WisdomTree Japan Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Japan Hedged 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 Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Japan Hedged has no effect on the direction of Exxon i.e., Exxon and WisdomTree Japan go up and down completely randomly.
Pair Corralation between Exxon and WisdomTree Japan
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 1.4 times more return on investment than WisdomTree Japan. However, Exxon is 1.4 times more volatile than WisdomTree Japan Hedged. It trades about 0.26 of its potential returns per unit of risk. WisdomTree Japan Hedged is currently generating about 0.24 per unit of risk. If you would invest 11,874 in Exxon Mobil Corp on November 11, 2025 and sell it today you would earn a total of 3,031 from holding Exxon Mobil Corp or generate 25.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 88.52% |
| Values | Daily Returns |
Exxon Mobil Corp vs. WisdomTree Japan Hedged
Performance |
| Timeline |
| Exxon Mobil Corp |
| WisdomTree Japan Hedged |
Risk-Adjusted Performance
Solid
Weak | Strong |
Exxon and WisdomTree Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and WisdomTree Japan
The main advantage of trading using opposite Exxon and WisdomTree Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, WisdomTree Japan 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 Japan will offset losses from the drop in WisdomTree Japan'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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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