Correlation Between Barrick Gold and LAir Liquide
Can any of the company-specific risk be diversified away by investing in both Barrick Gold and LAir Liquide 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 LAir Liquide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barrick Gold Corp and LAir Liquide SA, you can compare the effects of market volatilities on Barrick Gold and LAir Liquide 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 LAir Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and LAir Liquide.
Diversification Opportunities for Barrick Gold and LAir Liquide
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Barrick and LAir is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and LAir Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAir Liquide SA 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 Corp are associated (or correlated) with LAir Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAir Liquide SA has no effect on the direction of Barrick Gold i.e., Barrick Gold and LAir Liquide go up and down completely randomly.
Pair Corralation between Barrick Gold and LAir Liquide
Given the investment horizon of 90 days Barrick Gold Corp is expected to generate 1.68 times more return on investment than LAir Liquide. However, Barrick Gold is 1.68 times more volatile than LAir Liquide SA. It trades about -0.21 of its potential returns per unit of risk. LAir Liquide SA is currently generating about -0.37 per unit of risk. If you would invest 1,998 in Barrick Gold Corp on August 27, 2024 and sell it today you would lose (176.00) from holding Barrick Gold Corp or give up 8.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barrick Gold Corp vs. LAir Liquide SA
Performance |
| Timeline |
| Barrick Gold Corp |
| LAir Liquide SA |
Barrick Gold and LAir Liquide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barrick Gold and LAir Liquide
The main advantage of trading using opposite Barrick Gold and LAir Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barrick Gold position performs unexpectedly, LAir Liquide 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 LAir Liquide will offset losses from the drop in LAir Liquide's long position.| Barrick Gold vs. Agnico Eagle Mines | Barrick Gold vs. Pan American Silver | Barrick Gold vs. Wheaton Precious Metals | Barrick Gold vs. Kinross Gold |
| LAir Liquide vs. Asia Carbon Industries | LAir Liquide vs. Akzo Nobel NV | LAir Liquide vs. Avoca LLC | LAir Liquide vs. AGC Inc ADR |
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 Stocks Directory module to find actively traded stocks across global markets.
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