Correlation Between Exxon and GoldMining

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

Diversification Opportunities for Exxon and GoldMining

-0.36

Correlation Coefficient

Exxon  GoldMining

Very good diversification

The 3 months correlation between Exxon and GoldMining is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding EXXON MOBIL CDR and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining 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 GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Exxon i.e., Exxon and GoldMining go up and down completely randomly.

Pair Corralation between Exxon and GoldMining

Assuming the 90 days trading horizon EXXON MOBIL CDR is expected to generate 0.68 times more return on investment than GoldMining. However, EXXON MOBIL CDR is 1.47 times less risky than GoldMining. It trades about 0.07 of its potential returns per unit of risk. GoldMining is currently generating about 0.02 per unit of risk. If you would invest  1,951  in EXXON MOBIL CDR on May 2, 2025 and sell it today you would earn a total of  107.00  from holding EXXON MOBIL CDR or generate 5.48% return on investment over 90 days.

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

EXXON MOBIL CDR  vs.  GoldMining

EXXON MOBIL CDR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EXXON MOBIL CDR are ranked lower than 5 (%) 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.

GoldMining

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GoldMining are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, GoldMining is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Exxon and GoldMining

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

The idea behind EXXON MOBIL CDR and GoldMining 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.