Correlation Between Exxon and Grayscale Stellar

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

By analyzing existing cross correlation between Exxon Mobil Corp and Grayscale Stellar Lumens, you can compare the effects of market volatilities on Exxon and Grayscale Stellar 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 Grayscale Stellar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Grayscale Stellar.

Diversification Opportunities for Exxon and Grayscale Stellar

-0.16

Correlation Coefficient

Exxon  Grayscale Stellar

Good diversification

The 3 months correlation between Exxon and Grayscale is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Grayscale Stellar Lumens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Stellar Lumens 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 Corp are associated (or correlated) with Grayscale Stellar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grayscale Stellar Lumens has no effect on the direction of Exxon i.e., Exxon and Grayscale Stellar go up and down completely randomly.

Pair Corralation between Exxon and Grayscale Stellar

Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.18 times more return on investment than Grayscale Stellar. However, Exxon Mobil Corp is 5.51 times less risky than Grayscale Stellar. It trades about 0.12 of its potential returns per unit of risk. Grayscale Stellar Lumens is currently generating about -0.07 per unit of risk. If you would invest  10,493  in Exxon Mobil Corp on December 20, 2024 and sell it today you would earn a total of  1,048  from holding Exxon Mobil Corp or generate 9.99% return on investment over 90 days.

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

Exxon Mobil Corp  vs.  Grayscale Stellar Lumens

Exxon Mobil Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Exxon may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Grayscale Stellar Lumens

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Exxon and Grayscale Stellar

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

The idea behind Exxon Mobil Corp and Grayscale Stellar Lumens 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.