Correlation Between Exxon and Fidelity International

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

Diversification Opportunities for Exxon and Fidelity International

0.53

Correlation Coefficient

Exxon  Fidelity International

Very weak diversification

The 3 months correlation between Exxon and Fidelity is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Fidelity International Multifa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International 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 Fidelity International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity International has no effect on the direction of Exxon i.e., Exxon and Fidelity International go up and down completely randomly.

Pair Corralation between Exxon and Fidelity International

Considering the 90-day investment horizon Exxon is expected to generate 1.02 times less return on investment than Fidelity International. In addition to that, Exxon is 1.92 times more volatile than Fidelity International Multifactor. It trades about 0.11 of its total potential returns per unit of risk. Fidelity International Multifactor is currently generating about 0.21 per unit of volatility. If you would invest  2,731  in Fidelity International Multifactor on December 19, 2024 and sell it today you would earn a total of  254.00  from holding Fidelity International Multifactor or generate 9.3% 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.  Fidelity International Multifa

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 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Exxon may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Fidelity International

Risk-Adjusted Performance

Solid

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

Pair Trading with Exxon and Fidelity International

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

The idea behind Exxon Mobil Corp and Fidelity International Multifactor 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.