Correlation Between Imperial Oil and Exxon
Can any of the company-specific risk be diversified away by investing in both Imperial Oil and Exxon 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 Imperial Oil and Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Imperial Oil and Exxon Mobil Corp, you can compare the effects of market volatilities on Imperial Oil and Exxon 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 Imperial Oil with a short position of Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Oil and Exxon.
Diversification Opportunities for Imperial Oil and Exxon
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Imperial and Exxon is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Oil and Exxon Mobil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil Corp and Imperial Oil 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 Imperial Oil are associated (or correlated) with Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil Corp has no effect on the direction of Imperial Oil i.e., Imperial Oil and Exxon go up and down completely randomly.
Pair Corralation between Imperial Oil and Exxon
Considering the 90-day investment horizon Imperial Oil is expected to generate 1.5 times more return on investment than Exxon. However, Imperial Oil is 1.5 times more volatile than Exxon Mobil Corp. It trades about 0.25 of its potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.3 per unit of risk. If you would invest 5,679 in Imperial Oil on January 25, 2024 and sell it today you would earn a total of 1,372 from holding Imperial Oil or generate 24.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Imperial Oil vs. Exxon Mobil Corp
Performance |
| Timeline |
| Imperial Oil |
| Exxon Mobil Corp |
Imperial Oil and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imperial Oil and Exxon
The main advantage of trading using opposite Imperial Oil and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imperial Oil position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon's long position.| Imperial Oil vs. Suncor Energy | Imperial Oil vs. Ecopetrol SA ADR | Imperial Oil vs. Petroleo Brasileiro Petrobras | Imperial Oil vs. Equinor ASA ADR |
| Exxon vs. Shell PLC ADR | Exxon vs. BP PLC ADR | Exxon vs. Suncor Energy | Exxon vs. Petroleo Brasileiro Petrobras |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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