Correlation Between Exxon and Cytta Corp

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

Diversification Opportunities for Exxon and Cytta Corp

-0.49

Correlation Coefficient

Exxon  Cytta Corp

Very good diversification

The 3 months correlation between Exxon and Cytta is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Cytta Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cytta Corp 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 Cytta Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cytta Corp has no effect on the direction of Exxon i.e., Exxon and Cytta Corp go up and down completely randomly.

Pair Corralation between Exxon and Cytta Corp

Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.13 times more return on investment than Cytta Corp. However, Exxon Mobil Corp is 7.69 times less risky than Cytta Corp. It trades about -0.02 of its potential returns per unit of risk. Cytta Corp is currently generating about -0.03 per unit of risk. If you would invest  11,325  in Exxon Mobil Corp on September 17, 2024 and sell it today you would lose (241.00) from holding Exxon Mobil Corp or give up 2.13% of portfolio value over 90 days.

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

Exxon Mobil Corp  vs.  Cytta Corp

Exxon Mobil Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exxon Mobil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Exxon is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Cytta Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cytta Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Exxon and Cytta Corp

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

The idea behind Exxon Mobil Corp and Cytta 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.