Correlation Between Exxon and Sharp Corp

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

Diversification Opportunities for Exxon and Sharp Corp

-0.57

Correlation Coefficient

Exxon  Sharp Corp

Excellent diversification

The 3 months correlation between Exxon and Sharp is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Sharp Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharp Corp ADR 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 Sharp Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharp Corp ADR has no effect on the direction of Exxon i.e., Exxon and Sharp Corp go up and down completely randomly.

Pair Corralation between Exxon and Sharp Corp

Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.43 times more return on investment than Sharp Corp. However, Exxon Mobil Corp is 2.34 times less risky than Sharp Corp. It trades about -0.01 of its potential returns per unit of risk. Sharp Corp ADR is currently generating about -0.03 per unit of risk. If you would invest  11,940  in Exxon Mobil Corp on May 1, 2025 and sell it today you would lose (652.00) from holding Exxon Mobil Corp or give up 5.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Exxon Mobil Corp  vs.  Sharp Corp ADR

Exxon Mobil Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Exxon may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Sharp Corp ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sharp Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Exxon and Sharp Corp

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

The idea behind Exxon Mobil Corp and Sharp Corp ADR 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.