Correlation Between Exxon and Eat Well
Can any of the company-specific risk be diversified away by investing in both Exxon and Eat Well 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 Eat Well 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 Eat Well Investment, you can compare the effects of market volatilities on Exxon and Eat Well 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 Eat Well. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Eat Well.
Diversification Opportunities for Exxon and Eat Well
Very good diversification
The 3 months correlation between Exxon and Eat is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Eat Well Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eat Well Investment 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 Eat Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eat Well Investment has no effect on the direction of Exxon i.e., Exxon and Eat Well go up and down completely randomly.
Pair Corralation between Exxon and Eat Well
Considering the 90-day investment horizon Exxon Mobil Corp is expected to under-perform the Eat Well. But the stock apears to be less risky and, when comparing its historical volatility, Exxon Mobil Corp is 120.97 times less risky than Eat Well. The stock trades about -0.43 of its potential returns per unit of risk. The Eat Well Investment is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Eat Well Investment on September 20, 2024 and sell it today you would earn a total of 17.00 from holding Eat Well Investment or generate 566.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. Eat Well Investment
Performance |
| Timeline |
| Exxon Mobil Corp |
| Eat Well Investment |
Exxon and Eat Well Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Eat Well
The main advantage of trading using opposite Exxon and Eat Well positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, Eat Well 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 Eat Well will offset losses from the drop in Eat Well's long position.| Exxon vs. Aquagold International | Exxon vs. Thrivent High Yield | Exxon vs. Morningstar Unconstrained Allocation | Exxon vs. Via Renewables |
| Eat Well vs. Nuveen Global High | Eat Well vs. New America High | Eat Well vs. Brookfield Business Corp | Eat Well vs. DWS Municipal Income |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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