Correlation Between Exxon and Sprott Physical

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

Diversification Opportunities for Exxon and Sprott Physical

0.67

Correlation Coefficient

Exxon  Sprott Physical

Poor diversification

The 3 months correlation between Exxon and Sprott is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Sprott Physical Platinum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Platinum 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 Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Platinum has no effect on the direction of Exxon i.e., Exxon and Sprott Physical go up and down completely randomly.

Pair Corralation between Exxon and Sprott Physical

Considering the 90-day investment horizon Exxon is expected to generate 2.68 times less return on investment than Sprott Physical. But when comparing it to its historical volatility, Exxon Mobil Corp is 1.63 times less risky than Sprott Physical. It trades about 0.12 of its potential returns per unit of risk. Sprott Physical Platinum is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  944.00  in Sprott Physical Platinum on May 3, 2025 and sell it today you would earn a total of  248.00  from holding Sprott Physical Platinum or generate 26.27% return on investment over 90 days.

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

Exxon Mobil Corp  vs.  Sprott Physical Platinum

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 9 (%) 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 September 2025.

Sprott Physical Platinum

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Platinum are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Sprott Physical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Exxon and Sprott Physical

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

The idea behind Exxon Mobil Corp and Sprott Physical Platinum 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.