Correlation Between Exxon and IShares Currency
Can any of the company-specific risk be diversified away by investing in both Exxon and IShares Currency 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 IShares Currency 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 iShares Currency Hedged, you can compare the effects of market volatilities on Exxon and IShares Currency 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 IShares Currency. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and IShares Currency.
Diversification Opportunities for Exxon and IShares Currency
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Exxon and IShares is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and iShares Currency Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Currency Hedged 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 IShares Currency. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Currency Hedged has no effect on the direction of Exxon i.e., Exxon and IShares Currency go up and down completely randomly.
Pair Corralation between Exxon and IShares Currency
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 1.8 times more return on investment than IShares Currency. However, Exxon is 1.8 times more volatile than iShares Currency Hedged. It trades about 0.11 of its potential returns per unit of risk. iShares Currency Hedged is currently generating about 0.0 per unit of risk. If you would invest 11,862 in Exxon Mobil Corp on August 25, 2024 and sell it today you would earn a total of 317.00 from holding Exxon Mobil Corp or generate 2.67% 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. iShares Currency Hedged
Performance |
| Timeline |
| Exxon Mobil Corp |
| iShares Currency Hedged |
Exxon and IShares Currency Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and IShares Currency
The main advantage of trading using opposite Exxon and IShares Currency positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, IShares Currency 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 IShares Currency will offset losses from the drop in IShares Currency's long position.| Exxon vs. Shell PLC ADR | Exxon vs. BP PLC ADR | Exxon vs. Suncor Energy | Exxon vs. Petroleo Brasileiro Petrobras |
| IShares Currency vs. Dimensional Core Equity | IShares Currency vs. Dimensional Emerging Core | IShares Currency vs. Dimensional Targeted Value | IShares Currency vs. Dimensional Small Cap |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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