Correlation Between E Split and Exxon

Can any of the company-specific risk be diversified away by investing in both E Split and Exxon 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 E Split and Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between E Split Corp and EXXON MOBIL CDR, you can compare the effects of market volatilities on E Split and Exxon 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 E Split with a short position of Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Split and Exxon.

Diversification Opportunities for E Split and Exxon

0.53

Correlation Coefficient

E Split  Exxon

Very weak diversification

The 3 months correlation between ENS and Exxon is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding E Split Corp and EXXON MOBIL CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXXON MOBIL CDR and E Split 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 E Split Corp are associated (or correlated) with Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXXON MOBIL CDR has no effect on the direction of E Split i.e., E Split and Exxon go up and down completely randomly.

Pair Corralation between E Split and Exxon

Assuming the 90 days trading horizon E Split Corp is expected to generate 0.7 times more return on investment than Exxon. However, E Split Corp is 1.43 times less risky than Exxon. It trades about 0.2 of its potential returns per unit of risk. EXXON MOBIL CDR is currently generating about 0.05 per unit of risk. If you would invest  1,225  in E Split Corp on September 4, 2024 and sell it today you would earn a total of  153.00  from holding E Split Corp or generate 12.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

E Split Corp  vs.  EXXON MOBIL CDR

E Split Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in E Split Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, E Split may actually be approaching a critical reversion point that can send shares even higher in January 2025.

EXXON MOBIL CDR

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EXXON MOBIL CDR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Exxon is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with E Split and Exxon

The main advantage of trading using opposite E Split and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Split position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon's long position.

The idea behind E Split Corp and EXXON MOBIL CDR 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.