Correlation Between Exxon and IShares

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

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

Diversification Opportunities for Exxon and IShares

0.0

Correlation Coefficient

Exxon  IShares

Pay attention - limited upside

The 3 months correlation between Exxon and IShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and IShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares 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 Corp are associated (or correlated) with IShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares has no effect on the direction of Exxon i.e., Exxon and IShares go up and down completely randomly.

Pair Corralation between Exxon and IShares

If you would invest  10,630  in Exxon Mobil Corp on October 23, 2024 and sell it today you would earn a total of  517.00  from holding Exxon Mobil Corp or generate 4.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.26%
Values	Daily Returns

Exxon Mobil Corp  vs.  IShares

Exxon Mobil Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exxon Mobil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting 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.

IShares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IShares has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, IShares is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Exxon and IShares

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

The idea behind Exxon Mobil Corp and IShares 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.