Correlation Between Exxon and Cabana Target

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

Diversification Opportunities for Exxon and Cabana Target

0.64

Correlation Coefficient

Exxon  Cabana Target

Poor diversification

The 3 months correlation between Exxon and Cabana is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Cabana Target Drawdown in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabana Target Drawdown 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 Cabana Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabana Target Drawdown has no effect on the direction of Exxon i.e., Exxon and Cabana Target go up and down completely randomly.

Pair Corralation between Exxon and Cabana Target

Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 2.49 times more return on investment than Cabana Target. However, Exxon is 2.49 times more volatile than Cabana Target Drawdown. It trades about 0.09 of its potential returns per unit of risk. Cabana Target Drawdown is currently generating about 0.1 per unit of risk. If you would invest  10,233  in Exxon Mobil Corp on May 5, 2025 and sell it today you would earn a total of  731.00  from holding Exxon Mobil Corp or generate 7.14% 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.  Cabana Target Drawdown

Exxon Mobil Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Exxon may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Cabana Target Drawdown

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cabana Target Drawdown are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Cabana Target is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Exxon and Cabana Target

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

The idea behind Exxon Mobil Corp and Cabana Target Drawdown 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.