Correlation Between Stabilis Solutions and Exxon

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

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

Diversification Opportunities for Stabilis Solutions and Exxon

-0.57

Correlation Coefficient

Stabilis Solutions  Exxon

Excellent diversification

The 3 months correlation between Stabilis and Exxon is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Stabilis Solutions 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 Stabilis Solutions 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 Stabilis Solutions 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 Stabilis Solutions i.e., Stabilis Solutions and Exxon go up and down completely randomly.

Pair Corralation between Stabilis Solutions and Exxon

Given the investment horizon of 90 days Stabilis Solutions is expected to under-perform the Exxon. In addition to that, Stabilis Solutions is 1.5 times more volatile than Exxon Mobil Corp. It trades about -0.08 of its total potential returns per unit of risk. Exxon Mobil Corp is currently generating about -0.12 per unit of volatility. If you would invest  11,930  in Exxon Mobil Corp on February 3, 2024 and sell it today you would lose (328.00) from holding Exxon Mobil Corp or give up 2.75% of portfolio value over 90 days.

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

Stabilis Solutions  vs.  Exxon Mobil Corp

Stabilis Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stabilis Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Stabilis Solutions is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Exxon Mobil Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Exxon displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stabilis Solutions and Exxon

The main advantage of trading using opposite Stabilis Solutions and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stabilis Solutions 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 Stabilis Solutions 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 the Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.