Correlation Between Telephone and Exxon

Can any of the company-specific risk be diversified away by investing in both Telephone 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 Telephone and Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Telephone and Data and Exxon Mobil Corp, you can compare the effects of market volatilities on Telephone 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 Telephone with a short position of Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telephone and Exxon.

Diversification Opportunities for Telephone and Exxon

-0.46

Correlation Coefficient

Telephone  Exxon

Very good diversification

The 3 months correlation between Telephone and Exxon is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Telephone and Data 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 Telephone 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 Telephone and Data 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 Telephone i.e., Telephone and Exxon go up and down completely randomly.

Pair Corralation between Telephone and Exxon

Considering the 90-day investment horizon Telephone and Data is expected to generate 1.89 times more return on investment than Exxon. However, Telephone is 1.89 times more volatile than Exxon Mobil Corp. It trades about 0.03 of its potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.04 per unit of risk. If you would invest  1,567  in Telephone and Data on January 30, 2024 and sell it today you would earn a total of  11.00  from holding Telephone and Data or generate 0.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Telephone and Data  vs.  Exxon Mobil Corp

Telephone and Data

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telephone and Data has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Exxon Mobil Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Exxon displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telephone and Exxon

The main advantage of trading using opposite Telephone and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telephone 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.

The idea behind Telephone and Data and Exxon Mobil Corp 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.