Correlation Between Exxon and ProShares Short
Can any of the company-specific risk be diversified away by investing in both Exxon and ProShares Short 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 ProShares Short 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 ProShares Short SmallCap600, you can compare the effects of market volatilities on Exxon and ProShares Short 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 ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and ProShares Short.
Diversification Opportunities for Exxon and ProShares Short
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Exxon and ProShares is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and ProShares Short SmallCap600 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short Smal 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 ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short Smal has no effect on the direction of Exxon i.e., Exxon and ProShares Short go up and down completely randomly.
Pair Corralation between Exxon and ProShares Short
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.66 times more return on investment than ProShares Short. However, Exxon Mobil Corp is 1.52 times less risky than ProShares Short. It trades about 0.05 of its potential returns per unit of risk. ProShares Short SmallCap600 is currently generating about -0.22 per unit of risk. If you would invest 11,632 in Exxon Mobil Corp on August 30, 2024 and sell it today you would earn a total of 134.00 from holding Exxon Mobil Corp or generate 1.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Exxon Mobil Corp vs. ProShares Short SmallCap600
Performance |
| Timeline |
| Exxon Mobil Corp |
| ProShares Short Smal |
Exxon and ProShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and ProShares Short
The main advantage of trading using opposite Exxon and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, ProShares Short 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 ProShares Short will offset losses from the drop in ProShares Short's long position.| Exxon vs. BP PLC ADR | Exxon vs. Shell PLC ADR | Exxon vs. Petroleo Brasileiro Petrobras | Exxon vs. Suncor Energy |
| ProShares Short vs. ProShares Short MidCap400 | ProShares Short vs. ProShares UltraShort SmallCap600 | ProShares Short vs. ProShares UltraShort MidCap400 | ProShares Short vs. ProShares UltraShort Health |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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