Correlation Between BSAE and Exxon

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Can any of the company-specific risk be diversified away by investing in both BSAE 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 BSAE and Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BSAE and Exxon Mobil Corp, you can compare the effects of market volatilities on BSAE 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 BSAE with a short position of Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of BSAE and Exxon.

Diversification Opportunities for BSAE and Exxon

0.0
  Correlation Coefficient

Pay attention - limited upside

The 1 month correlation between BSAE and Exxon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BSAE 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 BSAE 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 BSAE 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 BSAE i.e., BSAE and Exxon go up and down completely randomly.

Pair Corralation between BSAE and Exxon

If you would invest  8,087  in Exxon Mobil Corp on December 29, 2023 and sell it today you would earn a total of  3,410  from holding Exxon Mobil Corp or generate 42.17% return on investment over 90 days.
Time Period1 Month [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

BSAE  vs.  Exxon Mobil Corp

 Performance 
       Timeline  
BSAE 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days BSAE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, BSAE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
Exxon Mobil Corp 

Risk-Adjusted Performance

46 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 46 (%) 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.

BSAE and Exxon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BSAE and Exxon

The main advantage of trading using opposite BSAE and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BSAE 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 BSAE 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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