Correlation Between Ford and Barrick Gold
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Barrick Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Barrick Gold, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Barrick Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Barrick Gold.
Diversification Opportunities for Ford and Barrick Gold
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and Barrick is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Barrick Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrick Gold and Ford 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 Ford Motor 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 Ford i.e., Ford and Barrick Gold go up and down completely randomly.
Pair Corralation between Ford and Barrick Gold
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Barrick Gold. In addition to that, Ford is 1.16 times more volatile than Barrick Gold. It trades about 0.0 of its total potential returns per unit of risk. Barrick Gold is currently generating about 0.02 per unit of volatility. If you would invest 1,501 in Barrick Gold on November 9, 2024 and sell it today you would earn a total of 149.00 from holding Barrick Gold or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.6% |
| Values | Daily Returns |
Ford Motor vs. Barrick Gold
Performance |
| Timeline |
| Ford Motor |
| Barrick Gold |
Ford and Barrick Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Barrick Gold
The main advantage of trading using opposite Ford and Barrick Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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.The idea behind Ford Motor and Barrick Gold 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.| Barrick Gold vs. X FAB Silicon Foundries | Barrick Gold vs. Silicon Motion Technology | Barrick Gold vs. CANON MARKETING JP | Barrick Gold vs. Tradegate AG Wertpapierhandelsbank |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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