Correlation Between Exxon and FT Vest
Can any of the company-specific risk be diversified away by investing in both Exxon and FT Vest 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 FT Vest 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 FT Vest Equity, you can compare the effects of market volatilities on Exxon and FT Vest 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 FT Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and FT Vest.
Diversification Opportunities for Exxon and FT Vest
Poor diversification
The 3 months correlation between Exxon and XMAY is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and FT Vest Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Equity 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 FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest Equity has no effect on the direction of Exxon i.e., Exxon and FT Vest go up and down completely randomly.
Pair Corralation between Exxon and FT Vest
Considering the 90-day investment horizon Exxon is expected to generate 2.21 times less return on investment than FT Vest. In addition to that, Exxon is 5.46 times more volatile than FT Vest Equity. It trades about 0.02 of its total potential returns per unit of risk. FT Vest Equity is currently generating about 0.22 per unit of volatility. If you would invest 3,121 in FT Vest Equity on August 29, 2024 and sell it today you would earn a total of 34.00 from holding FT Vest Equity or generate 1.09% 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. FT Vest Equity
Performance |
| Timeline |
| Exxon Mobil Corp |
| FT Vest Equity |
Exxon and FT Vest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and FT Vest
The main advantage of trading using opposite Exxon and FT Vest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, FT Vest 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 FT Vest will offset losses from the drop in FT Vest's long position.The idea behind Exxon Mobil Corp and FT Vest Equity 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.| FT Vest vs. FT Vest Equity | FT Vest vs. Northern Lights | FT Vest vs. Dimensional International High | FT Vest vs. First Trust Exchange Traded |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |