Correlation Between Barrick Gold and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Barrick Gold and Kaiser Aluminum 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 Barrick Gold and Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barrick Gold and Kaiser Aluminum, you can compare the effects of market volatilities on Barrick Gold and Kaiser Aluminum 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 Barrick Gold with a short position of Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and Kaiser Aluminum.
Diversification Opportunities for Barrick Gold and Kaiser Aluminum
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Barrick and Kaiser is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum and Barrick Gold 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 Barrick Gold are associated (or correlated) with Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of Barrick Gold i.e., Barrick Gold and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Barrick Gold and Kaiser Aluminum
Assuming the 90 days horizon Barrick Gold is expected to generate 0.71 times more return on investment than Kaiser Aluminum. However, Barrick Gold is 1.41 times less risky than Kaiser Aluminum. It trades about 0.05 of its potential returns per unit of risk. Kaiser Aluminum is currently generating about -0.02 per unit of risk. If you would invest 1,495 in Barrick Gold on September 2, 2024 and sell it today you would earn a total of 165.00 from holding Barrick Gold or generate 11.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barrick Gold vs. Kaiser Aluminum
Performance |
| Timeline |
| Barrick Gold |
| Kaiser Aluminum |
Barrick Gold and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barrick Gold and Kaiser Aluminum
The main advantage of trading using opposite Barrick Gold and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barrick Gold position performs unexpectedly, Kaiser Aluminum 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 Kaiser Aluminum will offset losses from the drop in Kaiser Aluminum's long position.| Barrick Gold vs. FARO Technologies | Barrick Gold vs. Tianjin Capital Environmental | Barrick Gold vs. GFL ENVIRONM | Barrick Gold vs. Insteel Industries |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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