Correlation Between Exxon and Payfare
Can any of the company-specific risk be diversified away by investing in both Exxon and Payfare 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 Payfare 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 Payfare, you can compare the effects of market volatilities on Exxon and Payfare 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 Payfare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Payfare.
Diversification Opportunities for Exxon and Payfare
Pay attention - limited upside
The 3 months correlation between Exxon and Payfare is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Payfare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payfare 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 Payfare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payfare has no effect on the direction of Exxon i.e., Exxon and Payfare go up and down completely randomly.
Pair Corralation between Exxon and Payfare
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.13 times more return on investment than Payfare. However, Exxon Mobil Corp is 7.55 times less risky than Payfare. It trades about 0.04 of its potential returns per unit of risk. Payfare is currently generating about -0.12 per unit of risk. If you would invest 11,453 in Exxon Mobil Corp on September 2, 2024 and sell it today you would earn a total of 343.00 from holding Exxon Mobil Corp or generate 2.99% 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. Payfare
Performance |
| Timeline |
| Exxon Mobil Corp |
| Payfare |
Exxon and Payfare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Payfare
The main advantage of trading using opposite Exxon and Payfare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, Payfare 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 Payfare will offset losses from the drop in Payfare's long position.The idea behind Exxon Mobil Corp and Payfare 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.| Payfare vs. Priority Technology Holdings | Payfare vs. Repay Holdings Corp | Payfare vs. Radware | Payfare vs. Global Blue Group |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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