Correlation Between Exxon and Madison Covered
Can any of the company-specific risk be diversified away by investing in both Exxon and Madison Covered 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 Madison Covered 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 Madison Ered Call, you can compare the effects of market volatilities on Exxon and Madison Covered 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 Madison Covered. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Madison Covered.
Diversification Opportunities for Exxon and Madison Covered
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Exxon and Madison is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Madison Ered Call in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Ered Call 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 Madison Covered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Ered Call has no effect on the direction of Exxon i.e., Exxon and Madison Covered go up and down completely randomly.
Pair Corralation between Exxon and Madison Covered
Considering the 90-day investment horizon Exxon Mobil Corp is expected to under-perform the Madison Covered. In addition to that, Exxon is 2.71 times more volatile than Madison Ered Call. It trades about -0.01 of its total potential returns per unit of risk. Madison Ered Call is currently generating about 0.02 per unit of volatility. If you would invest 878.00 in Madison Ered Call on November 4, 2024 and sell it today you would earn a total of 15.00 from holding Madison Ered Call or generate 1.71% 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. Madison Ered Call
Performance |
| Timeline |
| Exxon Mobil Corp |
| Madison Ered Call |
Exxon and Madison Covered Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Madison Covered
The main advantage of trading using opposite Exxon and Madison Covered positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, Madison Covered 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 Madison Covered will offset losses from the drop in Madison Covered's long position.| Exxon vs. Shell PLC ADR | Exxon vs. BP PLC ADR | Exxon vs. Suncor Energy | Exxon vs. Petroleo Brasileiro Petrobras |
| Madison Covered vs. Davis Financial Fund | Madison Covered vs. Schwab Government Money | Madison Covered vs. Ab Government Exchange | Madison Covered vs. Prudential Financial Services |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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