Correlation Between Exxon and KraneShares

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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

-0.63
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Exxon and KraneShares is -0.63. 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

If you would invest  1,307  in KraneShares on September 12, 2024 and sell it today you would earn a total of  0.00  from holding KraneShares or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy4.76%
ValuesDaily Returns

Exxon Mobil Corp  vs.  KraneShares

 Performance 
       Timeline  
Exxon Mobil Corp 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Exxon is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
KraneShares 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days KraneShares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, KraneShares is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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.
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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