Correlation Between Exxon and KFT

Can any of the company-specific risk be diversified away by investing in both Exxon and KFT 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 KFT 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 KFT, you can compare the effects of market volatilities on Exxon and KFT 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 KFT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and KFT.

Diversification Opportunities for Exxon and KFT

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Correlation Coefficient

Exxon  KFT

Pay attention - limited upside

The @@bw1eo months correlation between Exxon and KFT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and KFT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KFT 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 KFT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KFT has no effect on the direction of Exxon i.e., Exxon and KFT go up and down completely randomly.

Pair Corralation between Exxon and KFT

If you would invest  10,537  in Exxon Mobil Corp on February 3, 2024 and sell it today you would earn a total of  1,063  from holding Exxon Mobil Corp or generate 10.09% return on investment over 90 days.

Time Period	@@bw1EO Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Exxon Mobil Corp  vs.  KFT

Exxon Mobil Corp

Risk-Adjusted Performance

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Solid

Over the last 90 days Exxon Mobil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

KFT

Risk-Adjusted Performance

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Very Weak

Over the last 90 days KFT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, KFT is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Exxon and KFT

The main advantage of trading using opposite Exxon and KFT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, KFT 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 KFT will offset losses from the drop in KFT's long position.

The idea behind Exxon Mobil Corp and KFT 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.