Correlation Between Exxon and GIB Capital

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

Diversification Opportunities for Exxon and GIB Capital

-0.21

Correlation Coefficient

Exxon  GIB Capital

Very good diversification

The 3 months correlation between Exxon and GIB is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and GIB Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GIB Capital Group 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 GIB Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GIB Capital Group has no effect on the direction of Exxon i.e., Exxon and GIB Capital go up and down completely randomly.

Pair Corralation between Exxon and GIB Capital

If you would invest  11,379  in Exxon Mobil Corp on January 26, 2024 and sell it today you would earn a total of  726.00  from holding Exxon Mobil Corp or generate 6.38% return on investment over 90 days.

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

Exxon Mobil Corp  vs.  GIB Capital Group

Exxon Mobil Corp

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 22 (%) 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.

GIB Capital Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GIB Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, GIB Capital is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Exxon and GIB Capital

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

The idea behind Exxon Mobil Corp and GIB Capital Group 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..