I noticed while hunting for stat arb pairs that XOM and XLE (Energy etf ) are very very closely paired . They pass a co-integration test at 99% and are correlated at 88%. In-fact, they are so closely paired that they can not be profitably traded as a pair as the average convergence and divergence between them is too close and the spread is simply not profitable on my back testing.
However, we can still use this to our advantage. Although they do not make a good stat arb pair , we do know that if the energy etf (XLF) goes one direction , so does XOM . Based on this , I think that at the current share price, this is a very good longer term hold . Ignore everything to do with who wins the election and simply bet on a future reversal of XLF, which will happen ... eventually :)
At the time of writing , XOM is actually trading below it's book value ($41.54) Also, next years estimates call for a 415% increase in EPS, not to mention it comes with a 10.62% dividend . This is a good long , at a discount, patience likely required .
XLE is shown in orange and XOM is shown in blue ;)
Good luck ~
However, we can still use this to our advantage. Although they do not make a good stat arb pair , we do know that if the energy etf (XLF) goes one direction , so does XOM . Based on this , I think that at the current share price, this is a very good longer term hold . Ignore everything to do with who wins the election and simply bet on a future reversal of XLF, which will happen ... eventually :)
At the time of writing , XOM is actually trading below it's book value ($41.54) Also, next years estimates call for a 415% increase in EPS, not to mention it comes with a 10.62% dividend . This is a good long , at a discount, patience likely required .
XLE is shown in orange and XOM is shown in blue ;)
Good luck ~
艾力克~