Correlation Between Exxon and Mainstreet Equity
Can any of the company-specific risk be diversified away by investing in both Exxon and Mainstreet Equity 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 Mainstreet Equity 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 Mainstreet Equity Corp, you can compare the effects of market volatilities on Exxon and Mainstreet Equity 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 Mainstreet Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Mainstreet Equity.
Diversification Opportunities for Exxon and Mainstreet Equity
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Exxon and Mainstreet is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Mainstreet Equity Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstreet Equity 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 Mainstreet Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstreet Equity Corp has no effect on the direction of Exxon i.e., Exxon and Mainstreet Equity go up and down completely randomly.
Pair Corralation between Exxon and Mainstreet Equity
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.7 times more return on investment than Mainstreet Equity. However, Exxon Mobil Corp is 1.42 times less risky than Mainstreet Equity. It trades about 0.07 of its potential returns per unit of risk. Mainstreet Equity Corp is currently generating about 0.01 per unit of risk. If you would invest 9,959 in Exxon Mobil Corp on August 27, 2024 and sell it today you would earn a total of 2,220 from holding Exxon Mobil Corp or generate 22.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 71.37% |
| Values | Daily Returns |
Exxon Mobil Corp vs. Mainstreet Equity Corp
Performance |
| Timeline |
| Exxon Mobil Corp |
| Mainstreet Equity Corp |
Exxon and Mainstreet Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Mainstreet Equity
The main advantage of trading using opposite Exxon and Mainstreet Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, Mainstreet Equity 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 Mainstreet Equity will offset losses from the drop in Mainstreet Equity's long position.The idea behind Exxon Mobil Corp and Mainstreet Equity 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.| Mainstreet Equity vs. Smart REIT | Mainstreet Equity vs. Phillips Edison Co | Mainstreet Equity vs. Simon Property Group | Mainstreet Equity vs. Plaza Retail REIT |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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