Correlation Between Advisors Capital and Exxon

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

Diversification Opportunities for Advisors Capital and Exxon

-0.06
  Correlation Coefficient

Good diversification

The 3 months correlation between Advisors and Exxon is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Advisors Capital Tactical 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 Advisors Capital 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 Advisors Capital Tactical 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 Advisors Capital i.e., Advisors Capital and Exxon go up and down completely randomly.

Pair Corralation between Advisors Capital and Exxon

Assuming the 90 days horizon Advisors Capital Tactical is expected to under-perform the Exxon. But the mutual fund apears to be less risky and, when comparing its historical volatility, Advisors Capital Tactical is 7.58 times less risky than Exxon. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Exxon Mobil Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,968  in Exxon Mobil Corp on September 2, 2022 and sell it today you would earn a total of  7,112  from holding Exxon Mobil Corp or generate 179.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy93.16%
ValuesDaily Returns

Advisors Capital Tactical  vs.  Exxon Mobil Corp

 Performance (%) 
       Timeline  
Advisors Capital Tactical 
Advisors Performance
0 of 100
Over the last 90 days Advisors Capital Tactical has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Advisors Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Advisors Price Channel

Exxon Mobil Corp 
Exxon Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Exxon revealed solid returns over the last few months and may actually be approaching a breakup point.

Exxon Price Channel

Advisors Capital and Exxon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Advisors Capital and Exxon

The main advantage of trading using opposite Advisors Capital and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advisors Capital 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.
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The idea behind Advisors Capital Tactical 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.
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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