Correlation Between Exxon and IShares Interest
Can any of the company-specific risk be diversified away by investing in both Exxon and IShares Interest 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 Interest 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 Interest Rate, you can compare the effects of market volatilities on Exxon and IShares Interest 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 Interest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and IShares Interest.
Diversification Opportunities for Exxon and IShares Interest
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Exxon and IShares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and iShares Interest Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Interest Rate 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 Interest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Interest Rate has no effect on the direction of Exxon i.e., Exxon and IShares Interest go up and down completely randomly.
Pair Corralation between Exxon and IShares Interest
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 3.89 times more return on investment than IShares Interest. However, Exxon is 3.89 times more volatile than iShares Interest Rate. It trades about 0.05 of its potential returns per unit of risk. iShares Interest Rate is currently generating about 0.14 per unit of risk. If you would invest 11,301 in Exxon Mobil Corp on August 24, 2024 and sell it today you would earn a total of 892.00 from holding Exxon Mobil Corp or generate 7.89% 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 Interest Rate
Performance |
| Timeline |
| Exxon Mobil Corp |
| iShares Interest Rate |
Exxon and IShares Interest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and IShares Interest
The main advantage of trading using opposite Exxon and IShares Interest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, IShares Interest 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 Interest will offset losses from the drop in IShares Interest's long position.| Exxon vs. Chevron Corp | Exxon vs. Small Cap Core | Exxon vs. Freedom Holding Corp | Exxon vs. Gfl Environmental Holdings |
| IShares Interest vs. SPDR Bloomberg Short | IShares Interest vs. VanEck JP Morgan | IShares Interest vs. iShares 0 5 Year |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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