Correlation Between Civitas Resources and Exxon

Can any of the company-specific risk be diversified away by investing in both Civitas Resources 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 Civitas Resources and Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Civitas Resources and Exxon Mobil Corp, you can compare the effects of market volatilities on Civitas Resources 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 Civitas Resources with a short position of Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Civitas Resources and Exxon.

Diversification Opportunities for Civitas Resources and Exxon

0.91

Correlation Coefficient

Civitas Resources  Exxon

Almost no diversification

The 3 months correlation between Civitas and Exxon is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Civitas Resources 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 Civitas Resources 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 Civitas Resources 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 Civitas Resources i.e., Civitas Resources and Exxon go up and down completely randomly.

Pair Corralation between Civitas Resources and Exxon

Given the investment horizon of 90 days Civitas Resources is expected to under-perform the Exxon. In addition to that, Civitas Resources is 1.3 times more volatile than Exxon Mobil Corp. It trades about -0.11 of its total potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.28 per unit of volatility. If you would invest  11,309  in Exxon Mobil Corp on January 19, 2024 and sell it today you would earn a total of  554.00  from holding Exxon Mobil Corp or generate 4.9% return on investment over 90 days.

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

Civitas Resources  vs.  Exxon Mobil Corp

Civitas Resources

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Civitas Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Civitas Resources may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Exxon Mobil Corp

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Exxon displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Civitas Resources and Exxon

The main advantage of trading using opposite Civitas Resources and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Civitas Resources 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.

The idea behind Civitas Resources 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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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 CEOs Directory module to screen CEOs from public companies around the world.