Correlation Between Exxon and Flinders Resources

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

By analyzing existing cross correlation between EXXON MOBIL CDR and Flinders Resources Limited, you can compare the effects of market volatilities on Exxon and Flinders Resources 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 Flinders Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Flinders Resources.

Diversification Opportunities for Exxon and Flinders Resources

-0.76

Correlation Coefficient

Exxon  Flinders Resources

Pay attention - limited upside

The 3 months correlation between Exxon and Flinders is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding EXXON MOBIL CDR and Flinders Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flinders Resources 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 CDR are associated (or correlated) with Flinders Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flinders Resources has no effect on the direction of Exxon i.e., Exxon and Flinders Resources go up and down completely randomly.

Pair Corralation between Exxon and Flinders Resources

Assuming the 90 days trading horizon EXXON MOBIL CDR is expected to generate 0.37 times more return on investment than Flinders Resources. However, EXXON MOBIL CDR is 2.74 times less risky than Flinders Resources. It trades about -0.03 of its potential returns per unit of risk. Flinders Resources Limited is currently generating about -0.08 per unit of risk. If you would invest  2,131  in EXXON MOBIL CDR on April 21, 2025 and sell it today you would lose (142.00) from holding EXXON MOBIL CDR or give up 6.66% of portfolio value over 90 days.

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

EXXON MOBIL CDR  vs.  Flinders Resources Limited

EXXON MOBIL CDR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in EXXON MOBIL CDR 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 latest stock price disarray, may contribute to short-term losses for the investors.

Flinders Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flinders Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in August 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Exxon and Flinders Resources

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

The idea behind EXXON MOBIL CDR and Flinders Resources Limited 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.