Correlation Between Exxon and Silver Dollar
Can any of the company-specific risk be diversified away by investing in both Exxon and Silver Dollar 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 Silver Dollar 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 Silver Dollar Resources, you can compare the effects of market volatilities on Exxon and Silver Dollar 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 Silver Dollar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Silver Dollar.
Diversification Opportunities for Exxon and Silver Dollar
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Exxon and Silver is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Silver Dollar Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Dollar Resources 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 Silver Dollar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Dollar Resources has no effect on the direction of Exxon i.e., Exxon and Silver Dollar go up and down completely randomly.
Pair Corralation between Exxon and Silver Dollar
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.19 times more return on investment than Silver Dollar. However, Exxon Mobil Corp is 5.25 times less risky than Silver Dollar. It trades about -0.22 of its potential returns per unit of risk. Silver Dollar Resources is currently generating about -0.1 per unit of risk. If you would invest 11,997 in Exxon Mobil Corp on October 26, 2024 and sell it today you would lose (1,098) from holding Exxon Mobil Corp or give up 9.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.5% |
| Values | Daily Returns |
Exxon Mobil Corp vs. Silver Dollar Resources
Performance |
| Timeline |
| Exxon Mobil Corp |
| Silver Dollar Resources |
Exxon and Silver Dollar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Silver Dollar
The main advantage of trading using opposite Exxon and Silver Dollar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, Silver Dollar 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 Silver Dollar will offset losses from the drop in Silver Dollar's long position.| Exxon vs. Shell PLC ADR | Exxon vs. BP PLC ADR | Exxon vs. Suncor Energy | Exxon vs. Petroleo Brasileiro Petrobras |
| Silver Dollar vs. Hannan Metals | Silver Dollar vs. Atco Mining | Silver Dollar vs. Leading Edge Materials | Silver Dollar vs. Arianne Phosphate |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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