Correlation Between Exxon and ProShares
Can any of the company-specific risk be diversified away by investing in both Exxon and ProShares 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 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 SP Technology, you can compare the effects of market volatilities on Exxon and ProShares 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and ProShares.
Diversification Opportunities for Exxon and ProShares
Poor diversification
The 3 months correlation between Exxon and ProShares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and ProShares SP Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP Technology 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares SP Technology has no effect on the direction of Exxon i.e., Exxon and ProShares go up and down completely randomly.
Pair Corralation between Exxon and ProShares
Considering the 90-day investment horizon Exxon is expected to generate 1.41 times less return on investment than ProShares. In addition to that, Exxon is 1.33 times more volatile than ProShares SP Technology. It trades about 0.03 of its total potential returns per unit of risk. ProShares SP Technology is currently generating about 0.07 per unit of volatility. If you would invest 5,617 in ProShares SP Technology on August 30, 2024 and sell it today you would earn a total of 2,105 from holding ProShares SP Technology or generate 37.48% 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. ProShares SP Technology
Performance |
| Timeline |
| Exxon Mobil Corp |
| ProShares SP Technology |
Exxon and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and ProShares
The main advantage of trading using opposite Exxon and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, ProShares 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 will offset losses from the drop in ProShares' long position.The idea behind Exxon Mobil Corp and ProShares SP Technology 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.| ProShares vs. Nexalin Technology | ProShares vs. Kilroy Realty Corp | ProShares vs. Highwoods Properties | ProShares vs. Karat Packaging |
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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