Correlation Between Exxon and Income Fund
Can any of the company-specific risk be diversified away by investing in both Exxon and Income Fund 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 Income Fund 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 Income Fund Institutional, you can compare the effects of market volatilities on Exxon and Income Fund 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 Income Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Income Fund.
Diversification Opportunities for Exxon and Income Fund
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Exxon and Income is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Income Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Fund Institutional 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 Income Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Fund Institutional has no effect on the direction of Exxon i.e., Exxon and Income Fund go up and down completely randomly.
Pair Corralation between Exxon and Income Fund
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 4.82 times more return on investment than Income Fund. However, Exxon is 4.82 times more volatile than Income Fund Institutional. It trades about 0.07 of its potential returns per unit of risk. Income Fund Institutional is currently generating about 0.18 per unit of risk. If you would invest 10,919 in Exxon Mobil Corp on November 27, 2024 and sell it today you would earn a total of 208.00 from holding Exxon Mobil Corp or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. Income Fund Institutional
Performance |
| Timeline |
| Exxon Mobil Corp |
| Income Fund Institutional |
Exxon and Income Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Income Fund
The main advantage of trading using opposite Exxon and Income Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, Income Fund 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 Income Fund will offset losses from the drop in Income Fund's long position.| Exxon vs. Shell PLC ADR | Exxon vs. BP PLC ADR | Exxon vs. Suncor Energy | Exxon vs. Petroleo Brasileiro Petrobras |
| Income Fund vs. Jpmorgan Diversified Fund | Income Fund vs. Elfun Diversified Fund | Income Fund vs. Jhancock Diversified Macro | Income Fund vs. Fidelity Advisor Diversified |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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