Correlation Between Exxon and PARTS ID

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

Diversification Opportunities for Exxon and PARTS ID

0.0

Correlation Coefficient

Exxon  PARTS ID

Pay attention - limited upside

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

Pair Corralation between Exxon and PARTS ID

If you would invest  10,705  in Exxon Mobil Corp on December 17, 2024 and sell it today you would earn a total of  671.00  from holding Exxon Mobil Corp or generate 6.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Exxon Mobil Corp  vs.  PARTS ID

Exxon Mobil Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 6 (%) 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.

PARTS ID

Risk-Adjusted Performance

Very Weak

Over the last 90 days PARTS ID has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, PARTS ID is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Exxon and PARTS ID

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

The idea behind Exxon Mobil Corp and PARTS ID 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.