Correlation Between Cebu Air and Barrick Gold
Can any of the company-specific risk be diversified away by investing in both Cebu Air 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 Cebu Air and Barrick Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cebu Air ADR and Barrick Gold Corp, you can compare the effects of market volatilities on Cebu Air 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 Cebu Air with a short position of Barrick Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cebu Air and Barrick Gold.
Diversification Opportunities for Cebu Air and Barrick Gold
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cebu and Barrick is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Cebu Air ADR and Barrick Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrick Gold Corp and Cebu Air 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 Cebu Air ADR 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 Corp has no effect on the direction of Cebu Air i.e., Cebu Air and Barrick Gold go up and down completely randomly.
Pair Corralation between Cebu Air and Barrick Gold
Assuming the 90 days horizon Cebu Air ADR is expected to generate 1.85 times more return on investment than Barrick Gold. However, Cebu Air is 1.85 times more volatile than Barrick Gold Corp. It trades about 0.06 of its potential returns per unit of risk. Barrick Gold Corp is currently generating about 0.01 per unit of risk. If you would invest 150.00 in Cebu Air ADR on September 1, 2024 and sell it today you would earn a total of 35.00 from holding Cebu Air ADR or generate 23.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Cebu Air ADR vs. Barrick Gold Corp
Performance |
| Timeline |
| Cebu Air ADR |
| Barrick Gold Corp |
Cebu Air and Barrick Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cebu Air and Barrick Gold
The main advantage of trading using opposite Cebu Air and Barrick Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cebu Air 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.| Cebu Air vs. PennantPark Floating Rate | Cebu Air vs. Planet Fitness | Cebu Air vs. Fidus Investment Corp | Cebu Air vs. GAMCO Global Gold |
| Barrick Gold vs. Agnico Eagle Mines | Barrick Gold vs. Pan American Silver | Barrick Gold vs. Wheaton Precious Metals | Barrick Gold vs. Kinross Gold |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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