Correlation Between Exxon and State Street
Can any of the company-specific risk be diversified away by investing in both Exxon and State Street 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 State Street 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 State Street Master, you can compare the effects of market volatilities on Exxon and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and State Street.
Diversification Opportunities for Exxon and State Street
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Exxon and State is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and State Street Master in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Master 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Master has no effect on the direction of Exxon i.e., Exxon and State Street go up and down completely randomly.
Pair Corralation between Exxon and State Street
If you would invest 10,630 in Exxon Mobil Corp on October 23, 2024 and sell it today you would earn a total of 602.00 from holding Exxon Mobil Corp or generate 5.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Exxon Mobil Corp vs. State Street Master
Performance |
| Timeline |
| Exxon Mobil Corp |
| State Street Master |
Exxon and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and State Street
The main advantage of trading using opposite Exxon and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| Exxon vs. Shell PLC ADR | Exxon vs. BP PLC ADR | Exxon vs. Suncor Energy | Exxon vs. Petroleo Brasileiro Petrobras |
| State Street vs. Vanguard Total Stock | State Street vs. Vanguard 500 Index | State Street vs. Vanguard Total Stock | State Street 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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