Correlation Between Exxon and JABHOL

Can any of the company-specific risk be diversified away by investing in both Exxon and JABHOL 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 JABHOL 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 JABHOL 22 23 NOV 30, you can compare the effects of market volatilities on Exxon and JABHOL 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 JABHOL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and JABHOL.

Diversification Opportunities for Exxon and JABHOL

-0.32

Correlation Coefficient

Exxon  JABHOL

Very good diversification

The 3 months correlation between Exxon and JABHOL is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and JABHOL 22 23 NOV 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JABHOL 22 23 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 JABHOL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JABHOL 22 23 has no effect on the direction of Exxon i.e., Exxon and JABHOL go up and down completely randomly.

Pair Corralation between Exxon and JABHOL

Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.45 times more return on investment than JABHOL. However, Exxon Mobil Corp is 2.2 times less risky than JABHOL. It trades about -0.11 of its potential returns per unit of risk. JABHOL 22 23 NOV 30 is currently generating about -0.36 per unit of risk. If you would invest  11,640  in Exxon Mobil Corp on September 21, 2024 and sell it today you would lose (1,052) from holding Exxon Mobil Corp or give up 9.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	17.19%
Values	Daily Returns

Exxon Mobil Corp  vs.  JABHOL 22 23 NOV 30

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.

JABHOL 22 23

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JABHOL 22 23 NOV 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for JABHOL 22 23 NOV 30 investors.

Pair Trading with Exxon and JABHOL

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

The idea behind Exxon Mobil Corp and JABHOL 22 23 NOV 30 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.