Correlation Between Exxon and KraneShares
Can any of the company-specific risk be diversified away by investing in both Exxon and KraneShares 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 KraneShares 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 KraneShares, you can compare the effects of market volatilities on Exxon and KraneShares 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 KraneShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and KraneShares.
Diversification Opportunities for Exxon and KraneShares
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Exxon and KraneShares is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and KraneShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares 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 KraneShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares has no effect on the direction of Exxon i.e., Exxon and KraneShares go up and down completely randomly.
Pair Corralation between Exxon and KraneShares
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.81 times more return on investment than KraneShares. However, Exxon Mobil Corp is 1.24 times less risky than KraneShares. It trades about 0.03 of its potential returns per unit of risk. KraneShares is currently generating about 0.0 per unit of risk. If you would invest 10,029 in Exxon Mobil Corp on September 3, 2024 and sell it today you would earn a total of 1,767 from holding Exxon Mobil Corp or generate 17.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 30.91% |
| Values | Daily Returns |
Exxon Mobil Corp vs. KraneShares
Performance |
| Timeline |
| Exxon Mobil Corp |
| KraneShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Exxon and KraneShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and KraneShares
The main advantage of trading using opposite Exxon and KraneShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, KraneShares 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 KraneShares will offset losses from the drop in KraneShares' long position.The idea behind Exxon Mobil Corp and KraneShares 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.| KraneShares vs. Franklin FTSE South | KraneShares vs. Franklin FTSE Japan | KraneShares vs. Franklin FTSE India | KraneShares vs. Franklin FTSE Brazil |
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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