Correlation Between Exxon and SPDR FactSet
Can any of the company-specific risk be diversified away by investing in both Exxon and SPDR FactSet 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 SPDR FactSet 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 SPDR FactSet Innovative, you can compare the effects of market volatilities on Exxon and SPDR FactSet 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 SPDR FactSet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and SPDR FactSet.
Diversification Opportunities for Exxon and SPDR FactSet
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Exxon and SPDR is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and SPDR FactSet Innovative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR FactSet Innovative 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 SPDR FactSet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR FactSet Innovative has no effect on the direction of Exxon i.e., Exxon and SPDR FactSet go up and down completely randomly.
Pair Corralation between Exxon and SPDR FactSet
Considering the 90-day investment horizon Exxon is expected to generate 9.46 times less return on investment than SPDR FactSet. But when comparing it to its historical volatility, Exxon Mobil Corp is 1.5 times less risky than SPDR FactSet. It trades about 0.05 of its potential returns per unit of risk. SPDR FactSet Innovative is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 16,097 in SPDR FactSet Innovative on August 30, 2024 and sell it today you would earn a total of 1,934 from holding SPDR FactSet Innovative or generate 12.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Exxon Mobil Corp vs. SPDR FactSet Innovative
Performance |
| Timeline |
| Exxon Mobil Corp |
| SPDR FactSet Innovative |
Exxon and SPDR FactSet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and SPDR FactSet
The main advantage of trading using opposite Exxon and SPDR FactSet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, SPDR FactSet 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 SPDR FactSet will offset losses from the drop in SPDR FactSet's long position.| Exxon vs. BP PLC ADR | Exxon vs. Shell PLC ADR | Exxon vs. Petroleo Brasileiro Petrobras | Exxon vs. Suncor Energy |
| SPDR FactSet vs. SPDR SP Software | SPDR FactSet vs. SPDR Morgan Stanley | SPDR FactSet vs. SPDR SP Health |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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