Correlation Between PageGroup Plc and Exxon

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

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

Diversification Opportunities for PageGroup Plc and Exxon

-0.04

Correlation Coefficient

PageGroup Plc  Exxon

Good diversification

The 3 months correlation between PageGroup and Exxon is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding PageGroup plc 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 PageGroup Plc 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 PageGroup plc 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 PageGroup Plc i.e., PageGroup Plc and Exxon go up and down completely randomly.

Pair Corralation between PageGroup Plc and Exxon

Assuming the 90 days horizon PageGroup Plc is expected to generate 1.24 times less return on investment than Exxon. In addition to that, PageGroup Plc is 1.45 times more volatile than Exxon Mobil Corp. It trades about 0.22 of its total potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.39 per unit of volatility. If you would invest  11,230  in Exxon Mobil Corp on January 17, 2024 and sell it today you would earn a total of  738.00  from holding Exxon Mobil Corp or generate 6.57% return on investment over 90 days.

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

PageGroup plc  vs.  Exxon Mobil Corp

PageGroup plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PageGroup plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PageGroup Plc is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Exxon Mobil Corp

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 27 (%) 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 PageGroup Plc and Exxon

The main advantage of trading using opposite PageGroup Plc and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PageGroup Plc 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 PageGroup plc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.