Correlation Between Exxon and GQQQ
Can any of the company-specific risk be diversified away by investing in both Exxon and GQQQ 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 GQQQ 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 GQQQ, you can compare the effects of market volatilities on Exxon and GQQQ 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 GQQQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and GQQQ.
Diversification Opportunities for Exxon and GQQQ
Very good diversification
The 3 months correlation between Exxon and GQQQ is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and GQQQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GQQQ 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 GQQQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GQQQ has no effect on the direction of Exxon i.e., Exxon and GQQQ go up and down completely randomly.
Pair Corralation between Exxon and GQQQ
Considering the 90-day investment horizon Exxon is expected to generate 18.9 times less return on investment than GQQQ. In addition to that, Exxon is 1.1 times more volatile than GQQQ. It trades about 0.01 of its total potential returns per unit of risk. GQQQ is currently generating about 0.28 per unit of volatility. If you would invest 2,477 in GQQQ on September 4, 2024 and sell it today you would earn a total of 124.00 from holding GQQQ or generate 5.01% 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. GQQQ
Performance |
| Timeline |
| Exxon Mobil Corp |
| GQQQ |
Exxon and GQQQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and GQQQ
The main advantage of trading using opposite Exxon and GQQQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, GQQQ 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 GQQQ will offset losses from the drop in GQQQ's long position.The idea behind Exxon Mobil Corp and GQQQ 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.| GQQQ vs. Vanguard Total Stock | GQQQ vs. SPDR SP 500 | GQQQ vs. iShares Core SP | GQQQ vs. Vanguard Total Bond |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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