Correlation Between Exxon and SATS

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

Diversification Opportunities for Exxon and SATS

-0.78

Correlation Coefficient

Exxon  SATS

Pay attention - limited upside

The 3 months correlation between Exxon and SATS is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and SATS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SATS 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 SATS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SATS has no effect on the direction of Exxon i.e., Exxon and SATS go up and down completely randomly.

Pair Corralation between Exxon and SATS

Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.73 times more return on investment than SATS. However, Exxon Mobil Corp is 1.37 times less risky than SATS. It trades about 0.22 of its potential returns per unit of risk. SATS is currently generating about -0.19 per unit of risk. If you would invest  10,103  in Exxon Mobil Corp on February 2, 2024 and sell it today you would earn a total of  1,500  from holding Exxon Mobil Corp or generate 14.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Exxon Mobil Corp  vs.  SATS

Exxon Mobil Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Exxon displayed solid returns over the last few months and may actually be approaching a breakup point.

SATS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SATS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Exxon and SATS

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

The idea behind Exxon Mobil Corp and SATS 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.