Correlation Between Exxon and AMAZONCOM
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By analyzing existing cross correlation between Exxon Mobil Corp and AMAZONCOM INC, you can compare the effects of market volatilities on Exxon and AMAZONCOM 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 AMAZONCOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and AMAZONCOM.
Diversification Opportunities for Exxon and AMAZONCOM
Very good diversification
The 3 months correlation between Exxon and AMAZONCOM is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and AMAZONCOM INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMAZONCOM INC 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 AMAZONCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMAZONCOM INC has no effect on the direction of Exxon i.e., Exxon and AMAZONCOM go up and down completely randomly.
Pair Corralation between Exxon and AMAZONCOM
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 3.86 times more return on investment than AMAZONCOM. However, Exxon is 3.86 times more volatile than AMAZONCOM INC. It trades about 0.03 of its potential returns per unit of risk. AMAZONCOM INC is currently generating about 0.01 per unit of risk. If you would invest 9,920 in Exxon Mobil Corp on September 2, 2024 and sell it today you would earn a total of 1,876 from holding Exxon Mobil Corp or generate 18.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. AMAZONCOM INC
Performance |
| Timeline |
| Exxon Mobil Corp |
| AMAZONCOM INC |
Exxon and AMAZONCOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and AMAZONCOM
The main advantage of trading using opposite Exxon and AMAZONCOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, AMAZONCOM 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 AMAZONCOM will offset losses from the drop in AMAZONCOM's long position.The idea behind Exxon Mobil Corp and AMAZONCOM INC 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.| AMAZONCOM vs. Zijin Mining Group | AMAZONCOM vs. NioCorp Developments Ltd | AMAZONCOM vs. Globalfoundries | AMAZONCOM vs. Aehr Test Systems |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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