Correlation Between Exxon and AXS 125X
Can any of the company-specific risk be diversified away by investing in both Exxon and AXS 125X 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 AXS 125X 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 AXS 125X NVDA, you can compare the effects of market volatilities on Exxon and AXS 125X 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 AXS 125X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and AXS 125X.
Diversification Opportunities for Exxon and AXS 125X
Excellent diversification
The 3 months correlation between Exxon and AXS is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and AXS 125X NVDA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXS 125X NVDA 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 AXS 125X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXS 125X NVDA has no effect on the direction of Exxon i.e., Exxon and AXS 125X go up and down completely randomly.
Pair Corralation between Exxon and AXS 125X
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.32 times more return on investment than AXS 125X. However, Exxon Mobil Corp is 3.16 times less risky than AXS 125X. It trades about 0.01 of its potential returns per unit of risk. AXS 125X NVDA is currently generating about -0.08 per unit of risk. If you would invest 11,698 in Exxon Mobil Corp on August 30, 2024 and sell it today you would earn a total of 68.00 from holding Exxon Mobil Corp or generate 0.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. AXS 125X NVDA
Performance |
| Timeline |
| Exxon Mobil Corp |
| AXS 125X NVDA |
Exxon and AXS 125X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and AXS 125X
The main advantage of trading using opposite Exxon and AXS 125X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, AXS 125X 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 AXS 125X will offset losses from the drop in AXS 125X's long position.The idea behind Exxon Mobil Corp and AXS 125X NVDA 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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