Correlation Between Barrick Gold and Commercial Metals
Can any of the company-specific risk be diversified away by investing in both Barrick Gold and Commercial Metals 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 Commercial Metals 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 Commercial Metals, you can compare the effects of market volatilities on Barrick Gold and Commercial Metals 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 Commercial Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and Commercial Metals.
Diversification Opportunities for Barrick Gold and Commercial Metals
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barrick and Commercial is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Commercial Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial Metals 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 Commercial Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial Metals has no effect on the direction of Barrick Gold i.e., Barrick Gold and Commercial Metals go up and down completely randomly.
Pair Corralation between Barrick Gold and Commercial Metals
Given the investment horizon of 90 days Barrick Gold Corp is expected to generate 1.23 times more return on investment than Commercial Metals. However, Barrick Gold is 1.23 times more volatile than Commercial Metals. It trades about 0.27 of its potential returns per unit of risk. Commercial Metals is currently generating about 0.11 per unit of risk. If you would invest 1,600 in Barrick Gold Corp on November 18, 2024 and sell it today you would earn a total of 194.00 from holding Barrick Gold Corp or generate 12.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barrick Gold Corp vs. Commercial Metals
Performance |
| Timeline |
| Barrick Gold Corp |
| Commercial Metals |
Barrick Gold and Commercial Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barrick Gold and Commercial Metals
The main advantage of trading using opposite Barrick Gold and Commercial Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barrick Gold position performs unexpectedly, Commercial Metals 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 Commercial Metals will offset losses from the drop in Commercial Metals' 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 |
| Commercial Metals vs. Olympic Steel | Commercial Metals vs. Steel Dynamics | Commercial Metals vs. Nucor Corp | Commercial Metals vs. POSCO Holdings |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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