Correlation Between Exxon and IShares Core
Can any of the company-specific risk be diversified away by investing in both Exxon and IShares Core 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 IShares Core 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 iShares Core SP, you can compare the effects of market volatilities on Exxon and IShares Core 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 IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and IShares Core.
Diversification Opportunities for Exxon and IShares Core
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Exxon and IShares is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP 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 IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of Exxon i.e., Exxon and IShares Core go up and down completely randomly.
Pair Corralation between Exxon and IShares Core
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 1.02 times more return on investment than IShares Core. However, Exxon is 1.02 times more volatile than iShares Core SP. It trades about 0.38 of its potential returns per unit of risk. iShares Core SP is currently generating about -0.15 per unit of risk. If you would invest 11,379 in Exxon Mobil Corp on January 26, 2024 and sell it today you would earn a total of 726.00 from holding Exxon Mobil Corp or generate 6.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. iShares Core SP
Performance |
| Timeline |
| Exxon Mobil Corp |
| iShares Core SP |
Exxon and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and IShares Core
The main advantage of trading using opposite Exxon and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, IShares Core 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 IShares Core will offset losses from the drop in IShares Core's long position.| Exxon vs. Shell PLC ADR | Exxon vs. BP PLC ADR | Exxon vs. Suncor Energy | Exxon vs. Petroleo Brasileiro Petrobras |
| IShares Core vs. SPDR MSCI EAFE | IShares Core vs. SPDR MSCI Emerging | IShares Core vs. SPDR Russell 1000 | IShares Core vs. SPDR Russell 1000 |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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