Correlation Between Exxon and Zencash Investment

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

Diversification Opportunities for Exxon and Zencash Investment

-0.54

Correlation Coefficient

Exxon  Zencash Investment

Excellent diversification

The 3 months correlation between Exxon and Zencash is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Zencash Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zencash Investment Trust 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 Zencash Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zencash Investment Trust has no effect on the direction of Exxon i.e., Exxon and Zencash Investment go up and down completely randomly.

Pair Corralation between Exxon and Zencash Investment

Considering the 90-day investment horizon Exxon Mobil Corp is expected to under-perform the Zencash Investment. But the stock apears to be less risky and, when comparing its historical volatility, Exxon Mobil Corp is 7.05 times less risky than Zencash Investment. The stock trades about -0.09 of its potential returns per unit of risk. The Zencash Investment Trust is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  365.00  in Zencash Investment Trust on September 19, 2024 and sell it today you would earn a total of  207.00  from holding Zencash Investment Trust or generate 56.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Exxon Mobil Corp  vs.  Zencash Investment Trust

Exxon Mobil Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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 inconsistent 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.

Zencash Investment Trust

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zencash Investment Trust are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Zencash Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Exxon and Zencash Investment

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

The idea behind Exxon Mobil Corp and Zencash Investment Trust 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.