Correlation Between Commercial Metals and Barrick Gold
Can any of the company-specific risk be diversified away by investing in both Commercial Metals 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 Commercial Metals and Barrick Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial Metals and Barrick Gold Corp, you can compare the effects of market volatilities on Commercial Metals 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 Commercial Metals with a short position of Barrick Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Metals and Barrick Gold.
Diversification Opportunities for Commercial Metals and Barrick Gold
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Commercial and Barrick is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Metals 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 Commercial Metals 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 Commercial Metals 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 Commercial Metals i.e., Commercial Metals and Barrick Gold go up and down completely randomly.
Pair Corralation between Commercial Metals and Barrick Gold
Considering the 90-day investment horizon Commercial Metals is expected to generate 1.58 times more return on investment than Barrick Gold. However, Commercial Metals is 1.58 times more volatile than Barrick Gold Corp. It trades about 0.19 of its potential returns per unit of risk. Barrick Gold Corp is currently generating about -0.27 per unit of risk. If you would invest 5,413 in Commercial Metals on August 29, 2024 and sell it today you would earn a total of 724.00 from holding Commercial Metals or generate 13.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial Metals vs. Barrick Gold Corp
Performance |
| Timeline |
| Commercial Metals |
| Barrick Gold Corp |
Commercial Metals and Barrick Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial Metals and Barrick Gold
The main advantage of trading using opposite Commercial Metals and Barrick Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Metals 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.| Commercial Metals vs. Olympic Steel | Commercial Metals vs. Steel Dynamics | Commercial Metals vs. Nucor Corp | Commercial Metals vs. Universal Stainless Alloy |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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