Correlation Between Exxon and Kinaxis

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

Diversification Opportunities for Exxon and Kinaxis

-0.63

Correlation Coefficient

Exxon  Kinaxis

Excellent diversification

The 3 months correlation between Exxon and Kinaxis is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Kinaxis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinaxis 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 Kinaxis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinaxis has no effect on the direction of Exxon i.e., Exxon and Kinaxis go up and down completely randomly.

Pair Corralation between Exxon and Kinaxis

Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 1.67 times more return on investment than Kinaxis. However, Exxon is 1.67 times more volatile than Kinaxis. It trades about 0.05 of its potential returns per unit of risk. Kinaxis is currently generating about -0.23 per unit of risk. If you would invest  11,699  in Exxon Mobil Corp on February 1, 2024 and sell it today you would earn a total of  128.00  from holding Exxon Mobil Corp or generate 1.09% return on investment over 90 days.

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

Exxon Mobil Corp  vs.  Kinaxis

Exxon Mobil Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Exxon displayed solid returns over the last few months and may actually be approaching a breakup point.

Kinaxis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinaxis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Exxon and Kinaxis

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

The idea behind Exxon Mobil Corp and Kinaxis 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.