Correlation Between Southwestern Energy and Exxon

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Southwestern Energy and Exxon 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 Southwestern Energy and Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southwestern Energy and Exxon Mobil Corp, you can compare the effects of market volatilities on Southwestern Energy and Exxon 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 Southwestern Energy with a short position of Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwestern Energy and Exxon.

Diversification Opportunities for Southwestern Energy and Exxon

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between Southwestern and Exxon is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Southwestern Energy and Exxon Mobil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil Corp and Southwestern Energy 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 Southwestern Energy are associated (or correlated) with Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil Corp has no effect on the direction of Southwestern Energy i.e., Southwestern Energy and Exxon go up and down completely randomly.

Pair Corralation between Southwestern Energy and Exxon

Considering the 90-day investment horizon Southwestern Energy is expected to generate 1.08 times less return on investment than Exxon. In addition to that, Southwestern Energy is 1.97 times more volatile than Exxon Mobil Corp. It trades about 0.04 of its total potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.08 per unit of volatility. If you would invest  5,848  in Exxon Mobil Corp on March 31, 2022 and sell it today you would earn a total of  2,964  from holding Exxon Mobil Corp or generate 50.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Southwestern Energy  vs.  Exxon Mobil Corp

 Performance (%) 
      Timeline 
Southwestern Energy 
Southwestern Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Southwestern Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite sluggish basic indicators, Southwestern Energy may actually be approaching a critical reversion point that can send shares even higher in July 2022.

Structure and Payout Changes

Last Split Factor
2:1
Ex Dividend Date
2000-04-18
Last Split Date
2008-03-26

Southwestern Price Channel

Exxon Mobil Corp 
Exxon Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Exxon revealed solid returns over the last few months and may actually be approaching a breakup point.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0413
Payout Ratio
0.52
Last Split Factor
2:1
Forward Annual Dividend Rate
3.52
Dividend Date
2022-06-10
Ex Dividend Date
2022-05-12
Last Split Date
2001-07-19

Exxon Price Channel

Southwestern Energy and Exxon Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Southwestern Energy and Exxon

The main advantage of trading using opposite Southwestern Energy and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwestern Energy position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon's long position.
The idea behind Southwestern Energy and Exxon Mobil 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.
Check out your portfolio center. 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

Other Complementary Tools

Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Probability Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Go
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Go
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Go
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Go
Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Go