Correlation Between Exxon and Tiger Oil

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

Diversification Opportunities for Exxon and Tiger Oil

0.0

Correlation Coefficient

Exxon  Tiger Oil

Pay attention - limited upside

The 3 months correlation between Exxon and Tiger is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Tiger Oil And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiger Oil And 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 Tiger Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiger Oil And has no effect on the direction of Exxon i.e., Exxon and Tiger Oil go up and down completely randomly.

Pair Corralation between Exxon and Tiger Oil

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	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Exxon Mobil Corp  vs.  Tiger Oil And

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.

Tiger Oil And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tiger Oil And has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Tiger Oil is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Exxon and Tiger Oil

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

The idea behind Exxon Mobil Corp and Tiger Oil And 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 the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.