Correlation Between TRAINLINE PLC and Barrick Gold
Can any of the company-specific risk be diversified away by investing in both TRAINLINE PLC and Barrick Gold 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 TRAINLINE PLC and Barrick Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRAINLINE PLC LS and Barrick Gold, you can compare the effects of market volatilities on TRAINLINE PLC and Barrick Gold 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 TRAINLINE PLC with a short position of Barrick Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAINLINE PLC and Barrick Gold.
Diversification Opportunities for TRAINLINE PLC and Barrick Gold
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TRAINLINE and Barrick is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS and Barrick Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrick Gold and TRAINLINE PLC 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 TRAINLINE PLC LS are associated (or correlated) with Barrick Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrick Gold has no effect on the direction of TRAINLINE PLC i.e., TRAINLINE PLC and Barrick Gold go up and down completely randomly.
Pair Corralation between TRAINLINE PLC and Barrick Gold
Assuming the 90 days trading horizon TRAINLINE PLC LS is expected to under-perform the Barrick Gold. In addition to that, TRAINLINE PLC is 1.62 times more volatile than Barrick Gold. It trades about -0.15 of its total potential returns per unit of risk. Barrick Gold is currently generating about 0.26 per unit of volatility. If you would invest 1,531 in Barrick Gold on November 17, 2024 and sell it today you would earn a total of 188.00 from holding Barrick Gold or generate 12.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.65% |
Values | Daily Returns |
TRAINLINE PLC LS vs. Barrick Gold
Performance |
Timeline |
TRAINLINE PLC LS |
Barrick Gold |
TRAINLINE PLC and Barrick Gold Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with TRAINLINE PLC and Barrick Gold
The main advantage of trading using opposite TRAINLINE PLC and Barrick Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAINLINE PLC position performs unexpectedly, Barrick Gold 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 Barrick Gold will offset losses from the drop in Barrick Gold's long position.TRAINLINE PLC vs. Perseus Mining Limited | ||
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Check out your portfolio center.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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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