Correlation Between Exxon and Intrepid Metals
Can any of the company-specific risk be diversified away by investing in both Exxon and Intrepid Metals 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 Intrepid Metals 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 Intrepid Metals Corp, you can compare the effects of market volatilities on Exxon and Intrepid Metals 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 Intrepid Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Intrepid Metals.
Diversification Opportunities for Exxon and Intrepid Metals
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Exxon and Intrepid is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Intrepid Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intrepid Metals Corp 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 Intrepid Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intrepid Metals Corp has no effect on the direction of Exxon i.e., Exxon and Intrepid Metals go up and down completely randomly.
Pair Corralation between Exxon and Intrepid Metals
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.18 times more return on investment than Intrepid Metals. However, Exxon Mobil Corp is 5.69 times less risky than Intrepid Metals. It trades about 0.08 of its potential returns per unit of risk. Intrepid Metals Corp is currently generating about -0.01 per unit of risk. If you would invest 9,901 in Exxon Mobil Corp on August 29, 2024 and sell it today you would earn a total of 1,932 from holding Exxon Mobil Corp or generate 19.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.52% |
| Values | Daily Returns |
Exxon Mobil Corp vs. Intrepid Metals Corp
Performance |
| Timeline |
| Exxon Mobil Corp |
| Intrepid Metals Corp |
Exxon and Intrepid Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Intrepid Metals
The main advantage of trading using opposite Exxon and Intrepid Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, Intrepid Metals 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 Intrepid Metals will offset losses from the drop in Intrepid Metals' long position.The idea behind Exxon Mobil Corp and Intrepid Metals Corp 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.| Intrepid Metals vs. JD Sports Fashion | Intrepid Metals vs. Genuine Parts Co | Intrepid Metals vs. Universal Display | Intrepid Metals vs. SunLink Health Systems |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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