Correlation Between Exxon and First American
Can any of the company-specific risk be diversified away by investing in both Exxon and First American 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 First American 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 First American Funds, you can compare the effects of market volatilities on Exxon and First American 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 First American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and First American.
Diversification Opportunities for Exxon and First American
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Exxon and First is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and First American Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First American Funds 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 First American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First American Funds has no effect on the direction of Exxon i.e., Exxon and First American go up and down completely randomly.
Pair Corralation between Exxon and First American
If you would invest 11,764 in Exxon Mobil Corp on September 3, 2024 and sell it today you would earn a total of 32.00 from holding Exxon Mobil Corp or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. First American Funds
Performance |
| Timeline |
| Exxon Mobil Corp |
| First American Funds |
Exxon and First American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and First American
The main advantage of trading using opposite Exxon and First American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, First American 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 First American will offset losses from the drop in First American's long position.The idea behind Exxon Mobil Corp and First American Funds 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.| First American vs. Vanguard Total Stock | First American vs. Vanguard 500 Index | First American vs. Vanguard Total Stock | First American vs. Vanguard Total Stock |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Stocks Directory Find actively traded stocks across global markets |