Correlation Between Pacific Funds and Exxon

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Can any of the company-specific risk be diversified away by investing in both Pacific Funds 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 Pacific Funds and Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Funds Floating and Exxon Mobil Corp, you can compare the effects of market volatilities on Pacific Funds 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 Pacific Funds with a short position of Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Funds and Exxon.

Diversification Opportunities for Pacific Funds and Exxon

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Pacific and Exxon is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding PACIFIC FUNDS FLOATING 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 Pacific Funds 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 Pacific Funds Floating 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 Pacific Funds i.e., Pacific Funds and Exxon go up and down completely randomly.

Pair Corralation between Pacific Funds and Exxon

Assuming the 90 days horizon Pacific Funds Floating is expected to generate 0.12 times more return on investment than Exxon. However, Pacific Funds Floating is 8.14 times less risky than Exxon. It trades about 0.25 of its potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.02 per unit of risk. If you would invest  862.00  in Pacific Funds Floating on December 30, 2023 and sell it today you would earn a total of  93.00  from holding Pacific Funds Floating or generate 10.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

PACIFIC FUNDS FLOATING  vs.  Exxon Mobil Corp

 Performance 
       Timeline  
Pacific Funds Floating 

Risk-Adjusted Performance

17 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Funds Floating are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Pacific Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Exxon Mobil Corp 

Risk-Adjusted Performance

16 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Exxon displayed solid returns over the last few months and may actually be approaching a breakup point.

Pacific Funds and Exxon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pacific Funds and Exxon

The main advantage of trading using opposite Pacific Funds and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Funds 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 Pacific Funds Floating 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.
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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