Correlation Between Exxon and 25160PAE7

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Can any of the company-specific risk be diversified away by investing in both Exxon and 25160PAE7 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 25160PAE7 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 DEUTSCHE BK AG, you can compare the effects of market volatilities on Exxon and 25160PAE7 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 25160PAE7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and 25160PAE7.

Diversification Opportunities for Exxon and 25160PAE7

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Exxon and 25160PAE7 is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and DEUTSCHE BK AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEUTSCHE BK AG 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 25160PAE7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEUTSCHE BK AG has no effect on the direction of Exxon i.e., Exxon and 25160PAE7 go up and down completely randomly.

Pair Corralation between Exxon and 25160PAE7

Considering the 90-day investment horizon Exxon Mobil Corp is expected to under-perform the 25160PAE7. In addition to that, Exxon is 1.63 times more volatile than DEUTSCHE BK AG. It trades about -0.19 of its total potential returns per unit of risk. DEUTSCHE BK AG is currently generating about -0.13 per unit of volatility. If you would invest  10,055  in DEUTSCHE BK AG on October 28, 2024 and sell it today you would lose (213.00) from holding DEUTSCHE BK AG or give up 2.12% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy64.1%
ValuesDaily Returns

Exxon Mobil Corp  vs.  DEUTSCHE BK AG

 Performance 
       Timeline  
Exxon Mobil Corp 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Exxon Mobil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
DEUTSCHE BK AG 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days DEUTSCHE BK AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 25160PAE7 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Exxon and 25160PAE7 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Exxon and 25160PAE7

The main advantage of trading using opposite Exxon and 25160PAE7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, 25160PAE7 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 25160PAE7 will offset losses from the drop in 25160PAE7's long position.
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The idea behind Exxon Mobil Corp and DEUTSCHE BK AG 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.
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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