Correlation Between Sabio Holdings and Exxon

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

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

Diversification Opportunities for Sabio Holdings and Exxon

0.63

Correlation Coefficient

Sabio Holdings  Exxon

Poor diversification

The 3 months correlation between Sabio and Exxon is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sabio Holdings and Exxon Mobil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil Corp and Sabio Holdings 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 Sabio Holdings 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 Corp has no effect on the direction of Sabio Holdings i.e., Sabio Holdings and Exxon go up and down completely randomly.

Pair Corralation between Sabio Holdings and Exxon

Assuming the 90 days horizon Sabio Holdings is expected to generate 3.76 times more return on investment than Exxon. However, Sabio Holdings is 3.76 times more volatile than Exxon Mobil Corp. It trades about 0.1 of its potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.14 per unit of risk. If you would invest  36.00  in Sabio Holdings on December 27, 2024 and sell it today you would earn a total of  10.00  from holding Sabio Holdings or generate 27.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Sabio Holdings  vs.  Exxon Mobil Corp

Sabio Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sabio Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sabio Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Exxon Mobil Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 11 (%) 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 April 2025.

Pair Trading with Sabio Holdings and Exxon

The main advantage of trading using opposite Sabio Holdings and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabio Holdings 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 Sabio Holdings and Exxon Mobil Corp 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.