Correlation Between Exxon and Remy Cointreau

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

Diversification Opportunities for Exxon and Remy Cointreau

-0.3

Correlation Coefficient

Exxon  Remy Cointreau

Very good diversification

The 3 months correlation between Exxon and Remy is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Remy Cointreau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Remy Cointreau SA 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 Remy Cointreau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Remy Cointreau SA has no effect on the direction of Exxon i.e., Exxon and Remy Cointreau go up and down completely randomly.

Pair Corralation between Exxon and Remy Cointreau

Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.5 times more return on investment than Remy Cointreau. However, Exxon Mobil Corp is 2.01 times less risky than Remy Cointreau. It trades about 0.03 of its potential returns per unit of risk. Remy Cointreau SA is currently generating about -0.01 per unit of risk. If you would invest  11,024  in Exxon Mobil Corp on September 13, 2024 and sell it today you would earn a total of  168.00  from holding Exxon Mobil Corp or generate 1.52% 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.  Remy Cointreau SA

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 recent stock price disarray, may contribute to short-term losses for the investors.

Remy Cointreau SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Remy Cointreau SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Remy Cointreau is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Exxon and Remy Cointreau

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

The idea behind Exxon Mobil Corp and Remy Cointreau SA 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.