Correlation Between Exxon and NuShares Enhanced
Can any of the company-specific risk be diversified away by investing in both Exxon and NuShares Enhanced 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 NuShares Enhanced 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 NuShares Enhanced Yield, you can compare the effects of market volatilities on Exxon and NuShares Enhanced 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 NuShares Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and NuShares Enhanced.
Diversification Opportunities for Exxon and NuShares Enhanced
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Exxon and NuShares is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and NuShares Enhanced Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuShares Enhanced Yield 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 NuShares Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuShares Enhanced Yield has no effect on the direction of Exxon i.e., Exxon and NuShares Enhanced go up and down completely randomly.
Pair Corralation between Exxon and NuShares Enhanced
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 4.03 times more return on investment than NuShares Enhanced. However, Exxon is 4.03 times more volatile than NuShares Enhanced Yield. It trades about 0.03 of its potential returns per unit of risk. NuShares Enhanced Yield is currently generating about -0.04 per unit of risk. If you would invest 11,032 in Exxon Mobil Corp on September 12, 2024 and sell it today you would earn a total of 235.00 from holding Exxon Mobil Corp or generate 2.13% 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. NuShares Enhanced Yield
Performance |
Timeline |
Exxon Mobil Corp |
NuShares Enhanced Yield |
Exxon and NuShares Enhanced Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Exxon and NuShares Enhanced
The main advantage of trading using opposite Exxon and NuShares Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, NuShares Enhanced 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 NuShares Enhanced will offset losses from the drop in NuShares Enhanced'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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