Correlation Between Exxon and BHP Group

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

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

Diversification Opportunities for Exxon and BHP Group

0.73

Correlation Coefficient

Exxon  BHP Group

Poor diversification

The 3 months correlation between Exxon and BHP is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil and BHP Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group Limited 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 are associated (or correlated) with BHP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHP Group Limited has no effect on the direction of Exxon i.e., Exxon and BHP Group go up and down completely randomly.

Pair Corralation between Exxon and BHP Group

Assuming the 90 days trading horizon Exxon is expected to generate 1.97 times less return on investment than BHP Group. But when comparing it to its historical volatility, Exxon Mobil is 1.38 times less risky than BHP Group. It trades about 0.11 of its potential returns per unit of risk. BHP Group Limited is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,865,000  in BHP Group Limited on April 23, 2025 and sell it today you would earn a total of  545,000  from holding BHP Group Limited or generate 19.02% return on investment over 90 days.

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

Exxon Mobil  vs.  BHP Group Limited

Exxon Mobil

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Exxon may actually be approaching a critical reversion point that can send shares even higher in August 2025.

BHP Group Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BHP Group Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BHP Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Exxon and BHP Group

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

The idea behind Exxon Mobil and BHP Group 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.