Correlation Between Exxon and Aberdeen Income

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

Diversification Opportunities for Exxon and Aberdeen Income

0.69

Correlation Coefficient

Exxon  Aberdeen Income

Poor diversification

The 3 months correlation between Exxon and Aberdeen is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Aberdeen Income Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Income Credit 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 Aberdeen Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Income Credit has no effect on the direction of Exxon i.e., Exxon and Aberdeen Income go up and down completely randomly.

Pair Corralation between Exxon and Aberdeen Income

Considering the 90-day investment horizon Exxon is expected to generate 1.67 times less return on investment than Aberdeen Income. In addition to that, Exxon is 2.26 times more volatile than Aberdeen Income Credit. It trades about 0.04 of its total potential returns per unit of risk. Aberdeen Income Credit is currently generating about 0.15 per unit of volatility. If you would invest  612.00  in Aberdeen Income Credit on September 3, 2024 and sell it today you would earn a total of  35.00  from holding Aberdeen Income Credit or generate 5.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Exxon Mobil Corp  vs.  Aberdeen Income Credit

Exxon Mobil Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Exxon is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Aberdeen Income Credit

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aberdeen Income Credit are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively invariable fundamental indicators, Aberdeen Income is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Exxon and Aberdeen Income

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

The idea behind Exxon Mobil Corp and Aberdeen Income Credit 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.