Correlation Between Gibson Energy and Exchange Income

Can any of the company-specific risk be diversified away by investing in both Gibson Energy and Exchange Income 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 Gibson Energy and Exchange Income into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gibson Energy and Exchange Income, you can compare the effects of market volatilities on Gibson Energy and Exchange Income 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 Gibson Energy with a short position of Exchange Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gibson Energy and Exchange Income.

Diversification Opportunities for Gibson Energy and Exchange Income

0.88

Correlation Coefficient

Gibson Energy  Exchange Income

Very poor diversification

The 3 months correlation between Gibson and Exchange is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Gibson Energy and Exchange Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Income and Gibson 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 Gibson Energy are associated (or correlated) with Exchange Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Income has no effect on the direction of Gibson Energy i.e., Gibson Energy and Exchange Income go up and down completely randomly.

Pair Corralation between Gibson Energy and Exchange Income

Assuming the 90 days trading horizon Gibson Energy is expected to generate 1.95 times less return on investment than Exchange Income. But when comparing it to its historical volatility, Gibson Energy is 1.08 times less risky than Exchange Income. It trades about 0.26 of its potential returns per unit of risk. Exchange Income is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest  4,879  in Exchange Income on April 22, 2025 and sell it today you would earn a total of  1,710  from holding Exchange Income or generate 35.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Gibson Energy  vs.  Exchange Income

Gibson Energy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gibson Energy are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Gibson Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Exchange Income

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Exchange Income are ranked lower than 37 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Exchange Income displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gibson Energy and Exchange Income

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

The idea behind Gibson Energy and Exchange Income 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 the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.