Correlation Between Exxon and Global X
Can any of the company-specific risk be diversified away by investing in both Exxon and Global X 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 Global X 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 Global X Adaptive, you can compare the effects of market volatilities on Exxon and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Global X.
Diversification Opportunities for Exxon and Global X
Poor diversification
The 3 months correlation between Exxon and Global is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Global X Adaptive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Adaptive 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Adaptive has no effect on the direction of Exxon i.e., Exxon and Global X go up and down completely randomly.
Pair Corralation between Exxon and Global X
Considering the 90-day investment horizon Exxon is expected to generate 2.92 times less return on investment than Global X. In addition to that, Exxon is 1.58 times more volatile than Global X Adaptive. It trades about 0.08 of its total potential returns per unit of risk. Global X Adaptive is currently generating about 0.36 per unit of volatility. If you would invest 3,407 in Global X Adaptive on September 1, 2024 and sell it today you would earn a total of 209.00 from holding Global X Adaptive or generate 6.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Exxon Mobil Corp vs. Global X Adaptive
Performance |
| Timeline |
| Exxon Mobil Corp |
| Global X Adaptive |
Exxon and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Global X
The main advantage of trading using opposite Exxon and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.The idea behind Exxon Mobil Corp and Global X Adaptive 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.| Global X vs. Vanguard Total Stock | Global X vs. SPDR SP 500 | Global X vs. iShares Core SP | Global X vs. Vanguard Dividend Appreciation |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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