Correlation Between GMxico Transportes and Exxon

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

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

Diversification Opportunities for GMxico Transportes and Exxon

-0.52

Correlation Coefficient

GMxico Transportes  Exxon

Excellent diversification

The 3 months correlation between GMxico and Exxon is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding GMxico Transportes SAB and Exxon Mobil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil and GMxico Transportes 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 GMxico Transportes SAB 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 GMxico Transportes i.e., GMxico Transportes and Exxon go up and down completely randomly.

Pair Corralation between GMxico Transportes and Exxon

Assuming the 90 days trading horizon GMxico Transportes SAB is expected to generate 1.04 times more return on investment than Exxon. However, GMxico Transportes is 1.04 times more volatile than Exxon Mobil. It trades about 0.02 of its potential returns per unit of risk. Exxon Mobil is currently generating about -0.07 per unit of risk. If you would invest  3,131  in GMxico Transportes SAB on October 7, 2024 and sell it today you would earn a total of  40.00  from holding GMxico Transportes SAB or generate 1.28% return on investment over 90 days.

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

GMxico Transportes SAB  vs.  Exxon Mobil

GMxico Transportes SAB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GMxico Transportes SAB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, GMxico Transportes 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

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 latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with GMxico Transportes and Exxon

The main advantage of trading using opposite GMxico Transportes and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMxico Transportes 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 GMxico Transportes SAB 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.