Correlation Between Barrick Gold and American Eagle
Can any of the company-specific risk be diversified away by investing in both Barrick Gold and American Eagle 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 American Eagle 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 American Eagle Gold, you can compare the effects of market volatilities on Barrick Gold and American Eagle 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 American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and American Eagle.
Diversification Opportunities for Barrick Gold and American Eagle
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Barrick and American is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and American Eagle Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Eagle Gold 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 American Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Eagle Gold has no effect on the direction of Barrick Gold i.e., Barrick Gold and American Eagle go up and down completely randomly.
Pair Corralation between Barrick Gold and American Eagle
Given the investment horizon of 90 days Barrick Gold is expected to generate 15.64 times less return on investment than American Eagle. But when comparing it to its historical volatility, Barrick Gold Corp is 2.91 times less risky than American Eagle. It trades about 0.01 of its potential returns per unit of risk. American Eagle Gold is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 52.00 in American Eagle Gold on September 3, 2024 and sell it today you would earn a total of 15.00 from holding American Eagle Gold or generate 28.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barrick Gold Corp vs. American Eagle Gold
Performance |
| Timeline |
| Barrick Gold Corp |
| American Eagle Gold |
Barrick Gold and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barrick Gold and American Eagle
The main advantage of trading using opposite Barrick Gold and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barrick Gold position performs unexpectedly, American Eagle 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 American Eagle will offset losses from the drop in American Eagle's long position.| Barrick Gold vs. Agnico Eagle Mines | Barrick Gold vs. Gold Fields Ltd | Barrick Gold vs. Franco Nevada | Barrick Gold vs. Sandstorm Gold Ltd |
| American Eagle vs. Minnova Corp | American Eagle vs. Blue Star Gold | American Eagle vs. Advance Gold Corp | American Eagle vs. Argo 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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