Correlation Between Purpose Multi and Exxon

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

By analyzing existing cross correlation between Purpose Multi Asset Income and EXXON MOBIL CDR, you can compare the effects of market volatilities on Purpose Multi 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 Purpose Multi with a short position of Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Purpose Multi and Exxon.

Diversification Opportunities for Purpose Multi and Exxon

-0.6

Correlation Coefficient

Purpose Multi  Exxon

Excellent diversification

The 3 months correlation between Purpose and Exxon is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Purpose Multi Asset Income and EXXON MOBIL CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXXON MOBIL CDR and Purpose Multi 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 Purpose Multi Asset Income 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 CDR has no effect on the direction of Purpose Multi i.e., Purpose Multi and Exxon go up and down completely randomly.

Pair Corralation between Purpose Multi and Exxon

If you would invest  3,612  in EXXON MOBIL CDR on March 18, 2024 and sell it today you would earn a total of  184.00  from holding EXXON MOBIL CDR or generate 5.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	3.33%
Values	Daily Returns

Purpose Multi Asset Income  vs.  EXXON MOBIL CDR

Purpose Multi Asset

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Purpose Multi Asset Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Purpose Multi is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

EXXON MOBIL CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EXXON MOBIL CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Exxon is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Purpose Multi and Exxon

The main advantage of trading using opposite Purpose Multi and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Purpose Multi 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 Purpose Multi Asset Income and EXXON MOBIL CDR 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.