Correlation Between Exxon and Laboratory
Can any of the company-specific risk be diversified away by investing in both Exxon and Laboratory 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 Laboratory 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 Laboratory, you can compare the effects of market volatilities on Exxon and Laboratory 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 Laboratory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Laboratory.
Diversification Opportunities for Exxon and Laboratory
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Exxon and Laboratory is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Laboratory Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laboratory 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 Laboratory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laboratory has no effect on the direction of Exxon i.e., Exxon and Laboratory go up and down completely randomly.
Pair Corralation between Exxon and Laboratory
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 1.21 times more return on investment than Laboratory. However, Exxon is 1.21 times more volatile than Laboratory. It trades about 0.03 of its potential returns per unit of risk. Laboratory is currently generating about 0.01 per unit of risk. If you would invest 9,728 in Exxon Mobil Corp on December 29, 2023 and sell it today you would earn a total of 1,769 from holding Exxon Mobil Corp or generate 18.18% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Exxon Mobil Corp vs. Laboratory Of
Performance |
Timeline |
Exxon Mobil Corp |
Laboratory |
Exxon and Laboratory Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Exxon and Laboratory
The main advantage of trading using opposite Exxon and Laboratory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, Laboratory 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 Laboratory will offset losses from the drop in Laboratory's long position.Exxon vs. Crimson Wine | Exxon vs. PepsiCo | Exxon vs. Hudson Pacific Properties | Exxon vs. Postal Realty Trust |
Laboratory vs. Edwards Lifesciences Corp | Laboratory vs. Spectral AI | Laboratory vs. Microbot Medical | Laboratory vs. Medigus Ltd ADR |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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