Correlation Between Exxon and Cineplex

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

By analyzing existing cross correlation between EXXON MOBIL CDR and Cineplex, you can compare the effects of market volatilities on Exxon and Cineplex 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 Cineplex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Cineplex.

Diversification Opportunities for Exxon and Cineplex

-0.48

Correlation Coefficient

Exxon  Cineplex

Very good diversification

The 3 months correlation between Exxon and Cineplex is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding EXXON MOBIL CDR and Cineplex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cineplex 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 CDR are associated (or correlated) with Cineplex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cineplex has no effect on the direction of Exxon i.e., Exxon and Cineplex go up and down completely randomly.

Pair Corralation between Exxon and Cineplex

Assuming the 90 days trading horizon EXXON MOBIL CDR is expected to generate 1.04 times more return on investment than Cineplex. However, Exxon is 1.04 times more volatile than Cineplex. It trades about 0.09 of its potential returns per unit of risk. Cineplex is currently generating about -0.19 per unit of risk. If you would invest  1,995  in EXXON MOBIL CDR on December 31, 2024 and sell it today you would earn a total of  191.00  from holding EXXON MOBIL CDR or generate 9.57% return on investment over 90 days.

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

EXXON MOBIL CDR  vs.  Cineplex

EXXON MOBIL CDR

Risk-Adjusted Performance

OK

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

Cineplex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cineplex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Exxon and Cineplex

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

The idea behind EXXON MOBIL CDR and Cineplex 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 Anywhere module to track or share privately all of your investments from the convenience of any device.