Correlation Between Exxon and ERShares Entrepreneurs
Can any of the company-specific risk be diversified away by investing in both Exxon and ERShares Entrepreneurs 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 ERShares Entrepreneurs 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 ERShares Entrepreneurs ETF, you can compare the effects of market volatilities on Exxon and ERShares Entrepreneurs 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 ERShares Entrepreneurs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and ERShares Entrepreneurs.
Diversification Opportunities for Exxon and ERShares Entrepreneurs
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Exxon and ERShares is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and ERShares Entrepreneurs ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ERShares Entrepreneurs 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 ERShares Entrepreneurs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ERShares Entrepreneurs has no effect on the direction of Exxon i.e., Exxon and ERShares Entrepreneurs go up and down completely randomly.
Pair Corralation between Exxon and ERShares Entrepreneurs
Considering the 90-day investment horizon Exxon is expected to generate 6.59 times less return on investment than ERShares Entrepreneurs. But when comparing it to its historical volatility, Exxon Mobil Corp is 1.01 times less risky than ERShares Entrepreneurs. It trades about 0.01 of its potential returns per unit of risk. ERShares Entrepreneurs ETF is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,070 in ERShares Entrepreneurs ETF on October 25, 2024 and sell it today you would earn a total of 767.00 from holding ERShares Entrepreneurs ETF or generate 71.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 96.96% |
| Values | Daily Returns |
Exxon Mobil Corp vs. ERShares Entrepreneurs ETF
Performance |
| Timeline |
| Exxon Mobil Corp |
| ERShares Entrepreneurs |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Exxon and ERShares Entrepreneurs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and ERShares Entrepreneurs
The main advantage of trading using opposite Exxon and ERShares Entrepreneurs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, ERShares Entrepreneurs 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 ERShares Entrepreneurs will offset losses from the drop in ERShares Entrepreneurs' long position.| Exxon vs. Shell PLC ADR | Exxon vs. BP PLC ADR | Exxon vs. Suncor Energy | Exxon vs. Petroleo Brasileiro Petrobras |
| ERShares Entrepreneurs vs. East West Bancorp | ERShares Entrepreneurs vs. GSI Technology | ERShares Entrepreneurs vs. Amtech Systems | ERShares Entrepreneurs vs. Entegris |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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