Correlation Between Pioneer Natural and Exxon

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

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

Diversification Opportunities for Pioneer Natural and Exxon

0.85
  Correlation Coefficient
Pioneer Natural Resources
Exxon Mobil Corp

Very poor diversification

The 3 months correlation between Pioneer and Exxon is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Pioneer Natural 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 Pioneer Natural 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 Pioneer Natural 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 Pioneer Natural i.e., Pioneer Natural and Exxon go up and down completely randomly.

Pair Corralation between Pioneer Natural and Exxon

Considering the 90-day investment horizon Pioneer Natural Resources is expected to generate 0.94 times more return on investment than Exxon. However, Pioneer Natural Resources is 1.06 times less risky than Exxon. It trades about 0.67 of its potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.52 per unit of risk. If you would invest  17,310  in Pioneer Natural Resources on October 18, 2021 and sell it today you would earn a total of  4,260  from holding Pioneer Natural Resources or generate 24.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Pioneer Natural Resources  vs.  Exxon Mobil Corp

 Performance (%) 
      Timeline 
Pioneer Natural Resources 
Pioneer Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer Natural Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Pioneer Natural exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pioneer Price Channel

Exxon Mobil Corp 
Exxon Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 10 (%) 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

Pioneer Natural and Exxon Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Pioneer Natural and Exxon

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

Pioneer Natural Resources

Pair trading matchups for Pioneer Natural

The idea behind Pioneer Natural 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.
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 Watchlist Optimization module to optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm.

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