Correlation Between Exxon Mobil and Plano Plano

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

By analyzing existing cross correlation between Exxon Mobil and Plano Plano Desenvolvimento, you can compare the effects of market volatilities on Exxon Mobil and Plano Plano 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 Mobil with a short position of Plano Plano. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon Mobil and Plano Plano.

Diversification Opportunities for Exxon Mobil and Plano Plano

0.24

Correlation Coefficient

Exxon Mobil  Plano Plano

Modest diversification

The 3 months correlation between Exxon and Plano is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil and Plano Plano Desenvolvimento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plano Plano Desenvol and Exxon Mobil 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 are associated (or correlated) with Plano Plano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plano Plano Desenvol has no effect on the direction of Exxon Mobil i.e., Exxon Mobil and Plano Plano go up and down completely randomly.

Pair Corralation between Exxon Mobil and Plano Plano

Assuming the 90 days trading horizon Exxon Mobil is expected to generate 4.27 times less return on investment than Plano Plano. But when comparing it to its historical volatility, Exxon Mobil is 2.05 times less risky than Plano Plano. It trades about 0.04 of its potential returns per unit of risk. Plano Plano Desenvolvimento is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  377.00  in Plano Plano Desenvolvimento on September 14, 2024 and sell it today you would earn a total of  682.00  from holding Plano Plano Desenvolvimento or generate 180.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Exxon Mobil  vs.  Plano Plano Desenvolvimento

Exxon Mobil

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Exxon Mobil may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Plano Plano Desenvol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plano Plano Desenvolvimento has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Exxon Mobil and Plano Plano

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

The idea behind Exxon Mobil and Plano Plano Desenvolvimento 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.