Correlation Between Exxon and Stallion Discoveries
Can any of the company-specific risk be diversified away by investing in both Exxon and Stallion Discoveries 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 Stallion Discoveries 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 Stallion Discoveries Corp, you can compare the effects of market volatilities on Exxon and Stallion Discoveries 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 Stallion Discoveries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Stallion Discoveries.
Diversification Opportunities for Exxon and Stallion Discoveries
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Exxon and Stallion is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Stallion Discoveries Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stallion Discoveries Corp 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 Stallion Discoveries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stallion Discoveries Corp has no effect on the direction of Exxon i.e., Exxon and Stallion Discoveries go up and down completely randomly.
Pair Corralation between Exxon and Stallion Discoveries
Considering the 90-day investment horizon Exxon Mobil Corp is expected to under-perform the Stallion Discoveries. But the stock apears to be less risky and, when comparing its historical volatility, Exxon Mobil Corp is 2.18 times less risky than Stallion Discoveries. The stock trades about -0.13 of its potential returns per unit of risk. The Stallion Discoveries Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 8.66 in Stallion Discoveries Corp on January 10, 2025 and sell it today you would lose (0.66) from holding Stallion Discoveries Corp or give up 7.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. Stallion Discoveries Corp
Performance |
| Timeline |
| Exxon Mobil Corp |
| Stallion Discoveries Corp |
Exxon and Stallion Discoveries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Stallion Discoveries
The main advantage of trading using opposite Exxon and Stallion Discoveries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, Stallion Discoveries 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 Stallion Discoveries will offset losses from the drop in Stallion Discoveries' long position.| Exxon vs. Shell PLC ADR | Exxon vs. BP PLC ADR | Exxon vs. Suncor Energy | Exxon vs. Petroleo Brasileiro Petrobras |
| Stallion Discoveries vs. Universal Electronics | Stallion Discoveries vs. VOXX International | Stallion Discoveries vs. Sony Group Corp | Stallion Discoveries vs. TCL Electronics Holdings |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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