Correlation Between Exxon and Invesco Electric

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

Diversification Opportunities for Exxon and Invesco Electric

0.44

Correlation Coefficient

Exxon  Invesco Electric

Very weak diversification

The 3 months correlation between Exxon and Invesco is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Invesco Electric Vehicle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Electric Vehicle 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 Invesco Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Electric Vehicle has no effect on the direction of Exxon i.e., Exxon and Invesco Electric go up and down completely randomly.

Pair Corralation between Exxon and Invesco Electric

Considering the 90-day investment horizon Exxon is expected to generate 1.04 times less return on investment than Invesco Electric. In addition to that, Exxon is 1.62 times more volatile than Invesco Electric Vehicle. It trades about 0.12 of its total potential returns per unit of risk. Invesco Electric Vehicle is currently generating about 0.2 per unit of volatility. If you would invest  1,463  in Invesco Electric Vehicle on December 20, 2024 and sell it today you would earn a total of  159.00  from holding Invesco Electric Vehicle or generate 10.87% return on investment over 90 days.

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

Exxon Mobil Corp  vs.  Invesco Electric Vehicle

Exxon Mobil Corp

Risk-Adjusted Performance

OK

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

Invesco Electric Vehicle

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Electric Vehicle are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating primary indicators, Invesco Electric may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Exxon and Invesco Electric

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

The idea behind Exxon Mobil Corp and Invesco Electric Vehicle 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..