Correlation Between FibraHotel and Exxon

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

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

Diversification Opportunities for FibraHotel and Exxon

-0.56

Correlation Coefficient

FibraHotel  Exxon

Excellent diversification

The 3 months correlation between FibraHotel and Exxon is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding FibraHotel and Exxon Mobil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil and FibraHotel 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 FibraHotel 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 has no effect on the direction of FibraHotel i.e., FibraHotel and Exxon go up and down completely randomly.

Pair Corralation between FibraHotel and Exxon

Assuming the 90 days trading horizon FibraHotel is expected to generate 4.35 times more return on investment than Exxon. However, FibraHotel is 4.35 times more volatile than Exxon Mobil. It trades about 0.16 of its potential returns per unit of risk. Exxon Mobil is currently generating about -0.14 per unit of risk. If you would invest  900.00  in FibraHotel on October 9, 2024 and sell it today you would earn a total of  135.00  from holding FibraHotel or generate 15.0% return on investment over 90 days.

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

FibraHotel  vs.  Exxon Mobil

FibraHotel

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FibraHotel are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, FibraHotel sustained solid returns over the last few months and may actually be approaching a breakup point.

Exxon Mobil

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with FibraHotel and Exxon

The main advantage of trading using opposite FibraHotel and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FibraHotel 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 FibraHotel 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.