Correlation Between Exxon and Accelerate Canadian

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

By analyzing existing cross correlation between EXXON MOBIL CDR and Accelerate Canadian Long, you can compare the effects of market volatilities on Exxon and Accelerate Canadian 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 Accelerate Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Accelerate Canadian.

Diversification Opportunities for Exxon and Accelerate Canadian

-0.54

Correlation Coefficient

Exxon  Accelerate Canadian

Excellent diversification

The 3 months correlation between Exxon and Accelerate is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding EXXON MOBIL CDR and Accelerate Canadian Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accelerate Canadian Long 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 CDR are associated (or correlated) with Accelerate Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accelerate Canadian Long has no effect on the direction of Exxon i.e., Exxon and Accelerate Canadian go up and down completely randomly.

Pair Corralation between Exxon and Accelerate Canadian

Assuming the 90 days trading horizon EXXON MOBIL CDR is expected to under-perform the Accelerate Canadian. In addition to that, Exxon is 1.9 times more volatile than Accelerate Canadian Long. It trades about -0.02 of its total potential returns per unit of risk. Accelerate Canadian Long is currently generating about 0.12 per unit of volatility. If you would invest  2,549  in Accelerate Canadian Long on October 23, 2024 and sell it today you would earn a total of  124.00  from holding Accelerate Canadian Long or generate 4.86% return on investment over 90 days.

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

EXXON MOBIL CDR  vs.  Accelerate Canadian Long

EXXON MOBIL CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EXXON MOBIL CDR has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Accelerate Canadian Long

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Accelerate Canadian Long are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Accelerate Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Exxon and Accelerate Canadian

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

The idea behind EXXON MOBIL CDR and Accelerate Canadian Long 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.