Correlation Between Exxon and Sekisui Chemical
Can any of the company-specific risk be diversified away by investing in both Exxon and Sekisui Chemical 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 Sekisui Chemical 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 Sekisui Chemical Co, you can compare the effects of market volatilities on Exxon and Sekisui Chemical 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 Sekisui Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Sekisui Chemical.
Diversification Opportunities for Exxon and Sekisui Chemical
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Exxon and Sekisui is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Sekisui Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekisui Chemical 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 Sekisui Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekisui Chemical has no effect on the direction of Exxon i.e., Exxon and Sekisui Chemical go up and down completely randomly.
Pair Corralation between Exxon and Sekisui Chemical
Considering the 90-day investment horizon Exxon is expected to generate 1.13 times less return on investment than Sekisui Chemical. In addition to that, Exxon is 2.25 times more volatile than Sekisui Chemical Co. It trades about 0.04 of its total potential returns per unit of risk. Sekisui Chemical Co is currently generating about 0.11 per unit of volatility. If you would invest 1,438 in Sekisui Chemical Co on September 3, 2024 and sell it today you would earn a total of 112.00 from holding Sekisui Chemical Co or generate 7.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. Sekisui Chemical Co
Performance |
| Timeline |
| Exxon Mobil Corp |
| Sekisui Chemical |
Exxon and Sekisui Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Sekisui Chemical
The main advantage of trading using opposite Exxon and Sekisui Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, Sekisui Chemical 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 Sekisui Chemical will offset losses from the drop in Sekisui Chemical's long position.The idea behind Exxon Mobil Corp and Sekisui Chemical Co 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.| Sekisui Chemical vs. Grupo Bimbo SAB | Sekisui Chemical vs. Grupo Financiero Inbursa | Sekisui Chemical vs. Becle SA de | Sekisui Chemical vs. HUMANA INC |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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