Correlation Between Exxon and REX FANG
Can any of the company-specific risk be diversified away by investing in both Exxon and REX FANG 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 REX FANG 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 REX FANG Innovation, you can compare the effects of market volatilities on Exxon and REX FANG 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 REX FANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and REX FANG.
Diversification Opportunities for Exxon and REX FANG
Good diversification
The 3 months correlation between Exxon and REX is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and REX FANG Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REX FANG Innovation 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 REX FANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REX FANG Innovation has no effect on the direction of Exxon i.e., Exxon and REX FANG go up and down completely randomly.
Pair Corralation between Exxon and REX FANG
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.97 times more return on investment than REX FANG. However, Exxon Mobil Corp is 1.03 times less risky than REX FANG. It trades about 0.1 of its potential returns per unit of risk. REX FANG Innovation is currently generating about -0.08 per unit of risk. If you would invest 10,548 in Exxon Mobil Corp on December 18, 2024 and sell it today you would earn a total of 828.00 from holding Exxon Mobil Corp or generate 7.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Exxon Mobil Corp vs. REX FANG Innovation
Performance |
Timeline |
Exxon Mobil Corp |
REX FANG Innovation |
Exxon and REX FANG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Exxon and REX FANG
The main advantage of trading using opposite Exxon and REX FANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, REX FANG 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 REX FANG will offset losses from the drop in REX FANG's long position.Exxon vs. Shell PLC ADR | Exxon vs. BP PLC ADR | Exxon vs. Suncor Energy | Exxon vs. Petroleo Brasileiro Petrobras |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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