Correlation Between Exxon and TARGET
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By analyzing existing cross correlation between Exxon Mobil Corp and TARGET P 4, you can compare the effects of market volatilities on Exxon and TARGET 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 TARGET. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and TARGET.
Diversification Opportunities for Exxon and TARGET
Very good diversification
The 3 months correlation between Exxon and TARGET is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and TARGET P 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TARGET P 4 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 TARGET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TARGET P 4 has no effect on the direction of Exxon i.e., Exxon and TARGET go up and down completely randomly.
Pair Corralation between Exxon and TARGET
Considering the 90-day investment horizon Exxon is expected to generate 122.5 times less return on investment than TARGET. But when comparing it to its historical volatility, Exxon Mobil Corp is 66.62 times less risky than TARGET. It trades about 0.04 of its potential returns per unit of risk. TARGET P 4 is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 8,895 in TARGET P 4 on August 28, 2024 and sell it today you would earn a total of 517.00 from holding TARGET P 4 or generate 5.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 75.14% |
| Values | Daily Returns |
Exxon Mobil Corp vs. TARGET P 4
Performance |
| Timeline |
| Exxon Mobil Corp |
| TARGET P 4 |
Exxon and TARGET Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and TARGET
The main advantage of trading using opposite Exxon and TARGET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, TARGET 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 TARGET will offset losses from the drop in TARGET's long position.The idea behind Exxon Mobil Corp and TARGET P 4 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.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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