Correlation Between FBR ASSET and Exxon

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Can any of the company-specific risk be diversified away by investing in both FBR ASSET and Exxon 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 FBR ASSET and Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FBR ASSET INVESTMENT and Exxon Mobil Corp, you can compare the effects of market volatilities on FBR ASSET and Exxon 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 FBR ASSET with a short position of Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of FBR ASSET and Exxon.

Diversification Opportunities for FBR ASSET and Exxon

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between FBR ASSET and Exxon is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding FBR ASSET INVESTMENT and Exxon Mobil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil Corp and FBR ASSET 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 FBR ASSET INVESTMENT are associated (or correlated) with Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil Corp has no effect on the direction of FBR ASSET i.e., FBR ASSET and Exxon go up and down completely randomly.

Pair Corralation between FBR ASSET and Exxon

Allowing for the 90-day total investment horizon FBR ASSET INVESTMENT is expected to generate 1.37 times more return on investment than Exxon. However, FBR ASSET is 1.37 times more volatile than Exxon Mobil Corp. It trades about 0.02 of its potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.01 per unit of risk. If you would invest  16,935  in FBR ASSET INVESTMENT on May 16, 2022 and sell it today you would earn a total of  23.00  from holding FBR ASSET INVESTMENT or generate 0.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy71.43%
ValuesDaily Returns

FBR ASSET INVESTMENT  vs.  Exxon Mobil Corp

 Performance (%) 
       Timeline  
FBR ASSET INVESTMENT 
FBR ASSET Performance
0 of 100
Over the last 90 days FBR ASSET INVESTMENT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in September 2022. The current disturbance may also be a sign of long term up-swing for the company investors.
Exxon Mobil Corp 
Exxon Performance
3 of 100
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. Even with relatively steady basic indicators, Exxon is not utilizing all of its potentials. The new stock price chaos, may contribute to medium-term losses for the stakeholders.

Exxon Price Channel

FBR ASSET and Exxon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FBR ASSET and Exxon

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

FBR ASSET INVESTMENT

Pair trading matchups for FBR ASSET

The idea behind FBR ASSET INVESTMENT and Exxon Mobil Corp 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 Bond Directory module to find actively traded corporate debentures issued by US companies.

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