Correlation Between Exxon and Changebridge Capital

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

Diversification Opportunities for Exxon and Changebridge Capital

-0.49

Correlation Coefficient

Exxon  Changebridge Capital

Very good diversification

The 3 months correlation between Exxon and Changebridge is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Changebridge Capital Sustainab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changebridge Capital 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 Changebridge Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changebridge Capital has no effect on the direction of Exxon i.e., Exxon and Changebridge Capital go up and down completely randomly.

Pair Corralation between Exxon and Changebridge Capital

Considering the 90-day investment horizon Exxon Mobil Corp is expected to under-perform the Changebridge Capital. But the stock apears to be less risky and, when comparing its historical volatility, Exxon Mobil Corp is 1.04 times less risky than Changebridge Capital. The stock trades about -0.03 of its potential returns per unit of risk. The Changebridge Capital Sustainable is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,661  in Changebridge Capital Sustainable on October 12, 2024 and sell it today you would earn a total of  767.00  from holding Changebridge Capital Sustainable or generate 28.82% 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 Corp  vs.  Changebridge Capital Sustainab

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 weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Changebridge Capital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Changebridge Capital Sustainable are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Changebridge Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Exxon and Changebridge Capital

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

The idea behind Exxon Mobil Corp and Changebridge Capital Sustainable 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.