Correlation Between Exxon and Riocan REIT
Can any of the company-specific risk be diversified away by investing in both Exxon and Riocan REIT 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 Riocan REIT 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 Riocan REIT, you can compare the effects of market volatilities on Exxon and Riocan REIT 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 Riocan REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Riocan REIT.
Diversification Opportunities for Exxon and Riocan REIT
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Exxon and Riocan is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Riocan REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riocan REIT 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 Riocan REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riocan REIT has no effect on the direction of Exxon i.e., Exxon and Riocan REIT go up and down completely randomly.
Pair Corralation between Exxon and Riocan REIT
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.87 times more return on investment than Riocan REIT. However, Exxon Mobil Corp is 1.15 times less risky than Riocan REIT. It trades about 0.04 of its potential returns per unit of risk. Riocan REIT is currently generating about 0.0 per unit of risk. If you would invest 10,207 in Exxon Mobil Corp on September 1, 2024 and sell it today you would earn a total of 1,589 from holding Exxon Mobil Corp or generate 15.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. Riocan REIT
Performance |
| Timeline |
| Exxon Mobil Corp |
| Riocan REIT |
Exxon and Riocan REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Riocan REIT
The main advantage of trading using opposite Exxon and Riocan REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, Riocan REIT 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 Riocan REIT will offset losses from the drop in Riocan REIT's long position.The idea behind Exxon Mobil Corp and Riocan REIT 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.| Riocan REIT vs. Choice Properties Real | Riocan REIT vs. CT Real Estate | Riocan REIT vs. Firm Capital Property | Riocan REIT vs. Slate Grocery 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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