Correlation Between Exxon and Western Midstream
Can any of the company-specific risk be diversified away by investing in both Exxon and Western Midstream 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 Western Midstream 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 Western Midstream Partners, you can compare the effects of market volatilities on Exxon and Western Midstream 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 Western Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Western Midstream.
Diversification Opportunities for Exxon and Western Midstream
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Exxon and Western is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Western Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Midstream 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 Western Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Midstream has no effect on the direction of Exxon i.e., Exxon and Western Midstream go up and down completely randomly.
Pair Corralation between Exxon and Western Midstream
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.7 times more return on investment than Western Midstream. However, Exxon Mobil Corp is 1.43 times less risky than Western Midstream. It trades about 0.46 of its potential returns per unit of risk. Western Midstream Partners is currently generating about 0.11 per unit of risk. If you would invest 10,425 in Exxon Mobil Corp on January 25, 2024 and sell it today you would earn a total of 1,680 from holding Exxon Mobil Corp or generate 16.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. Western Midstream Partners
Performance |
| Timeline |
| Exxon Mobil Corp |
| Western Midstream |
Exxon and Western Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Western Midstream
The main advantage of trading using opposite Exxon and Western Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, Western Midstream 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 Western Midstream will offset losses from the drop in Western Midstream's long position.| 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |