Correlation Between Exxon and Jamieson Wellness

Can any of the company-specific risk be diversified away by investing in both Exxon and Jamieson Wellness 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 Jamieson Wellness 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 Jamieson Wellness, you can compare the effects of market volatilities on Exxon and Jamieson Wellness 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 Jamieson Wellness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Jamieson Wellness.

Diversification Opportunities for Exxon and Jamieson Wellness

-0.56

Correlation Coefficient

Exxon  Jamieson Wellness

Excellent diversification

The 3 months correlation between Exxon and Jamieson is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding EXXON MOBIL CDR and Jamieson Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jamieson Wellness 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 Jamieson Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jamieson Wellness has no effect on the direction of Exxon i.e., Exxon and Jamieson Wellness go up and down completely randomly.

Pair Corralation between Exxon and Jamieson Wellness

Assuming the 90 days trading horizon EXXON MOBIL CDR is expected to under-perform the Jamieson Wellness. But the stock apears to be less risky and, when comparing its historical volatility, EXXON MOBIL CDR is 1.04 times less risky than Jamieson Wellness. The stock trades about -0.03 of its potential returns per unit of risk. The Jamieson Wellness is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,894  in Jamieson Wellness on September 29, 2024 and sell it today you would earn a total of  756.00  from holding Jamieson Wellness or generate 26.12% 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.  Jamieson Wellness

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 latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Jamieson Wellness

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jamieson Wellness are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Jamieson Wellness is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Exxon and Jamieson Wellness

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

The idea behind EXXON MOBIL CDR and Jamieson Wellness 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 Global Correlations module to find global opportunities by holding instruments from different markets.