Correlation Between Exxon and Hercules Metals
Can any of the company-specific risk be diversified away by investing in both Exxon and Hercules Metals 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 Hercules Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EXXON MOBIL CDR and Hercules Metals Corp, you can compare the effects of market volatilities on Exxon and Hercules Metals 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 Hercules Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Hercules Metals.
Diversification Opportunities for Exxon and Hercules Metals
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Exxon and Hercules is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding EXXON MOBIL CDR and Hercules Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Metals Corp 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 CDR are associated (or correlated) with Hercules Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hercules Metals Corp has no effect on the direction of Exxon i.e., Exxon and Hercules Metals go up and down completely randomly.
Pair Corralation between Exxon and Hercules Metals
Assuming the 90 days trading horizon EXXON MOBIL CDR is expected to under-perform the Hercules Metals. But the stock apears to be less risky and, when comparing its historical volatility, EXXON MOBIL CDR is 4.16 times less risky than Hercules Metals. The stock trades about -0.12 of its potential returns per unit of risk. The Hercules Metals Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 58.00 in Hercules Metals Corp on September 23, 2024 and sell it today you would lose (4.00) from holding Hercules Metals Corp or give up 6.9% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
EXXON MOBIL CDR vs. Hercules Metals Corp
Performance |
Timeline |
EXXON MOBIL CDR |
Hercules Metals Corp |
Exxon and Hercules Metals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Exxon and Hercules Metals
The main advantage of trading using opposite Exxon and Hercules Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, Hercules Metals 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 Hercules Metals will offset losses from the drop in Hercules Metals' long position.Exxon vs. Data Communications Management | Exxon vs. Nova Leap Health | Exxon vs. Arbor Metals Corp | Exxon vs. TGS Esports |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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