Correlation Between Exxon and Casa Systems

Can any of the company-specific risk be diversified away by investing in both Exxon and Casa Systems 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 Casa Systems 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 Casa Systems, you can compare the effects of market volatilities on Exxon and Casa Systems 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 Casa Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Casa Systems.

Diversification Opportunities for Exxon and Casa Systems

-0.14

Correlation Coefficient

Exxon  Casa Systems

Good diversification

The 3 months correlation between Exxon and Casa is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Casa Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casa Systems 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 Casa Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Casa Systems has no effect on the direction of Exxon i.e., Exxon and Casa Systems go up and down completely randomly.

Pair Corralation between Exxon and Casa Systems

If you would invest  111.00  in Casa Systems on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Casa Systems or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

Exxon Mobil Corp  vs.  Casa Systems

Exxon Mobil Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Exxon is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Casa Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Casa Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Casa Systems is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Exxon and Casa Systems

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

The idea behind Exxon Mobil Corp and Casa Systems 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..