Correlation Between Exxon and SPDR Dow
Can any of the company-specific risk be diversified away by investing in both Exxon and SPDR Dow 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 SPDR Dow 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 SPDR Dow Jones, you can compare the effects of market volatilities on Exxon and SPDR Dow 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 SPDR Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and SPDR Dow.
Diversification Opportunities for Exxon and SPDR Dow
Very good diversification
The 3 months correlation between Exxon and SPDR is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and SPDR Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Dow Jones 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 SPDR Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Dow Jones has no effect on the direction of Exxon i.e., Exxon and SPDR Dow go up and down completely randomly.
Pair Corralation between Exxon and SPDR Dow
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 1.38 times more return on investment than SPDR Dow. However, Exxon is 1.38 times more volatile than SPDR Dow Jones. It trades about 0.09 of its potential returns per unit of risk. SPDR Dow Jones is currently generating about -0.36 per unit of risk. If you would invest 11,929 in Exxon Mobil Corp on August 24, 2024 and sell it today you would earn a total of 264.00 from holding Exxon Mobil Corp or generate 2.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. SPDR Dow Jones
Performance |
| Timeline |
| Exxon Mobil Corp |
| SPDR Dow Jones |
Exxon and SPDR Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and SPDR Dow
The main advantage of trading using opposite Exxon and SPDR Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, SPDR Dow 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 SPDR Dow will offset losses from the drop in SPDR Dow's long position.| Exxon vs. Chevron Corp | Exxon vs. Small Cap Core | Exxon vs. Freedom Holding Corp | Exxon vs. Gfl Environmental Holdings |
| SPDR Dow vs. SPDR Dow Jones | SPDR Dow vs. SPDR Dow Jones | SPDR Dow vs. SPDR SP International | SPDR Dow vs. iShares Cohen Steers |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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