Correlation Between Exxon and Wialan Technologies

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

Diversification Opportunities for Exxon and Wialan Technologies

-0.31

Correlation Coefficient

Exxon  Wialan Technologies

Very good diversification

The 3 months correlation between Exxon and Wialan is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Wialan Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wialan Technologies 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 Wialan Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wialan Technologies has no effect on the direction of Exxon i.e., Exxon and Wialan Technologies go up and down completely randomly.

Pair Corralation between Exxon and Wialan Technologies

Considering the 90-day investment horizon Exxon is expected to generate 2.13 times less return on investment than Wialan Technologies. But when comparing it to its historical volatility, Exxon Mobil Corp is 6.72 times less risky than Wialan Technologies. It trades about 0.14 of its potential returns per unit of risk. Wialan Technologies is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.09  in Wialan Technologies on December 27, 2024 and sell it today you would earn a total of  0.00  from holding Wialan Technologies or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Exxon Mobil Corp  vs.  Wialan Technologies

Exxon Mobil Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 10 (%) 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.

Wialan Technologies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wialan Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Wialan Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Exxon and Wialan Technologies

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

The idea behind Exxon Mobil Corp and Wialan Technologies 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.