Correlation Between Exxon and Frontier Lithium

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

By analyzing existing cross correlation between Exxon Mobil Corp and Frontier Lithium, you can compare the effects of market volatilities on Exxon and Frontier Lithium 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 Frontier Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Frontier Lithium.

Diversification Opportunities for Exxon and Frontier Lithium

-0.37

Correlation Coefficient

Exxon  Frontier Lithium

Very good diversification

The 3 months correlation between Exxon and Frontier is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Frontier Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Lithium 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 Corp are associated (or correlated) with Frontier Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Lithium has no effect on the direction of Exxon i.e., Exxon and Frontier Lithium go up and down completely randomly.

Pair Corralation between Exxon and Frontier Lithium

Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.4 times more return on investment than Frontier Lithium. However, Exxon Mobil Corp is 2.52 times less risky than Frontier Lithium. It trades about 0.08 of its potential returns per unit of risk. Frontier Lithium is currently generating about -0.04 per unit of risk. If you would invest  10,524  in Exxon Mobil Corp on May 2, 2025 and sell it today you would earn a total of  640.00  from holding Exxon Mobil Corp or generate 6.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Exxon Mobil Corp  vs.  Frontier Lithium

Exxon Mobil Corp

Risk-Adjusted Performance

Modest

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. In spite of very weak basic indicators, Exxon may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Frontier Lithium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Frontier Lithium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Exxon and Frontier Lithium

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

The idea behind Exxon Mobil Corp and Frontier Lithium 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.