Correlation Between Exxon and Filament Health
Can any of the company-specific risk be diversified away by investing in both Exxon and Filament Health 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 Filament Health 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 Filament Health Corp, you can compare the effects of market volatilities on Exxon and Filament Health 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 Filament Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Filament Health.
Diversification Opportunities for Exxon and Filament Health
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Exxon and Filament is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Filament Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Filament Health Corp 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 Filament Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Filament Health Corp has no effect on the direction of Exxon i.e., Exxon and Filament Health go up and down completely randomly.
Pair Corralation between Exxon and Filament Health
Considering the 90-day investment horizon Exxon is expected to generate 29.74 times less return on investment than Filament Health. But when comparing it to its historical volatility, Exxon Mobil Corp is 13.58 times less risky than Filament Health. It trades about 0.03 of its potential returns per unit of risk. Filament Health Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5.03 in Filament Health Corp on August 30, 2024 and sell it today you would lose (1.09) from holding Filament Health Corp or give up 21.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. Filament Health Corp
Performance |
| Timeline |
| Exxon Mobil Corp |
| Filament Health Corp |
Exxon and Filament Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Filament Health
The main advantage of trading using opposite Exxon and Filament Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, Filament Health 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 Filament Health will offset losses from the drop in Filament Health's long position.The idea behind Exxon Mobil Corp and Filament Health Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Filament Health vs. Target Group | Filament Health vs. Aequus Pharmaceuticals | Filament Health vs. Sky Century Investment | Filament Health vs. Levitee Labs |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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