Correlation Between OAKTRSPECLENDNEW and Exxon Mobil

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

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

Diversification Opportunities for OAKTRSPECLENDNEW and Exxon Mobil

-0.07

Correlation Coefficient

OAKTRSPECLENDNEW  Exxon Mobil

Good diversification

The 3 months correlation between OAKTRSPECLENDNEW and Exxon is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding OAKTRSPECLENDNEW and Exxon Mobil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil and OAKTRSPECLENDNEW 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 OAKTRSPECLENDNEW are associated (or correlated) with Exxon Mobil. 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 has no effect on the direction of OAKTRSPECLENDNEW i.e., OAKTRSPECLENDNEW and Exxon Mobil go up and down completely randomly.

Pair Corralation between OAKTRSPECLENDNEW and Exxon Mobil

Assuming the 90 days trading horizon OAKTRSPECLENDNEW is expected to generate 1.09 times more return on investment than Exxon Mobil. However, OAKTRSPECLENDNEW is 1.09 times more volatile than Exxon Mobil. It trades about 0.03 of its potential returns per unit of risk. Exxon Mobil is currently generating about -0.09 per unit of risk. If you would invest  1,428  in OAKTRSPECLENDNEW on October 5, 2024 and sell it today you would earn a total of  31.00  from holding OAKTRSPECLENDNEW or generate 2.17% return on investment over 90 days.

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

OAKTRSPECLENDNEW  vs.  Exxon Mobil

OAKTRSPECLENDNEW

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days OAKTRSPECLENDNEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, OAKTRSPECLENDNEW is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Exxon Mobil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exxon Mobil has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with OAKTRSPECLENDNEW and Exxon Mobil

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

The idea behind OAKTRSPECLENDNEW and Exxon Mobil 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.