Correlation Between Exxon and Dermata Therapeutics

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

Diversification Opportunities for Exxon and Dermata Therapeutics

0.61

Correlation Coefficient

Exxon  Dermata Therapeutics

Poor diversification

The 3 months correlation between Exxon and Dermata is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Dermata Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dermata Therapeutics 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 Dermata Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dermata Therapeutics has no effect on the direction of Exxon i.e., Exxon and Dermata Therapeutics go up and down completely randomly.

Pair Corralation between Exxon and Dermata Therapeutics

Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.28 times more return on investment than Dermata Therapeutics. However, Exxon Mobil Corp is 3.61 times less risky than Dermata Therapeutics. It trades about 0.17 of its potential returns per unit of risk. Dermata Therapeutics is currently generating about 0.02 per unit of risk. If you would invest  10,310  in Exxon Mobil Corp on February 14, 2025 and sell it today you would earn a total of  538.00  from holding Exxon Mobil Corp or generate 5.22% return on investment over 90 days.

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

Exxon Mobil Corp  vs.  Dermata Therapeutics

Exxon Mobil Corp

Risk-Adjusted Performance

Weak

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

Dermata Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dermata Therapeutics 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 primary indicators remain somewhat strong which may send shares a bit higher in June 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Exxon and Dermata Therapeutics

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

The idea behind Exxon Mobil Corp and Dermata Therapeutics 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.