Correlation Between GX AI and Exxon Mobil

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

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

Diversification Opportunities for GX AI and Exxon Mobil

-0.33

Correlation Coefficient

GX AI  Exxon Mobil

Very good diversification

The 3 months correlation between BAIQ39 and Exxon is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding GX AI TECH and Exxon Mobil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil and GX AI 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 GX AI TECH are associated (or correlated) with Exxon Mobil. 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 has no effect on the direction of GX AI i.e., GX AI and Exxon Mobil go up and down completely randomly.

Pair Corralation between GX AI and Exxon Mobil

Assuming the 90 days trading horizon GX AI TECH is expected to under-perform the Exxon Mobil. But the stock apears to be less risky and, when comparing its historical volatility, GX AI TECH is 1.09 times less risky than Exxon Mobil. The stock trades about -0.03 of its potential returns per unit of risk. The Exxon Mobil is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  7,774  in Exxon Mobil on December 5, 2024 and sell it today you would earn a total of  390.00  from holding Exxon Mobil or generate 5.02% return on investment over 90 days.

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

GX AI TECH  vs.  Exxon Mobil

GX AI TECH

Risk-Adjusted Performance

Very Weak

Over the last 90 days GX AI TECH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, GX AI is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Exxon Mobil

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exxon Mobil has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Exxon Mobil is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GX AI and Exxon Mobil

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

The idea behind GX AI TECH and Exxon Mobil 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.