Correlation Between Twitter and Exxon
Can any of the company-specific risk be diversified away by investing in both Twitter 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 Twitter and Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Twitter and Exxon Mobil Corp, you can compare the effects of market volatilities on Twitter 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 Twitter with a short position of Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Twitter and Exxon.
Diversification Opportunities for Twitter and Exxon
Poor diversification
The 3 months correlation between Twitter and Exxon is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Twitter 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 Twitter 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 Twitter 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 Twitter i.e., Twitter and Exxon go up and down completely randomly.
Pair Corralation between Twitter and Exxon
Given the investment horizon of 90 days Twitter is expected to generate 1.95 times more return on investment than Exxon. However, Twitter is 1.95 times more volatile than Exxon Mobil Corp. It trades about 0.04 of its potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.06 per unit of risk. If you would invest 4,796 in Twitter on December 30, 2023 and sell it today you would earn a total of 574.00 from holding Twitter or generate 11.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 25.47% |
Values | Daily Returns |
Twitter vs. Exxon Mobil Corp
Performance |
Timeline |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Exxon Mobil Corp |
Twitter and Exxon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Twitter and Exxon
The main advantage of trading using opposite Twitter and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Twitter 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.Twitter vs. United Guardian | Twitter vs. Kinetik Holdings | Twitter vs. Philip Morris International | Twitter vs. ASML Holding NV |
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 Stocks Directory module to find actively traded stocks across global markets.
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