Correlation Between Barrick Gold and Falcon Metals
Can any of the company-specific risk be diversified away by investing in both Barrick Gold and Falcon 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 Falcon 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 Falcon Metals Limited, you can compare the effects of market volatilities on Barrick Gold and Falcon 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 Falcon Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and Falcon Metals.
Diversification Opportunities for Barrick Gold and Falcon Metals
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barrick and Falcon is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Falcon Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Metals Limited 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 Falcon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Metals Limited has no effect on the direction of Barrick Gold i.e., Barrick Gold and Falcon Metals go up and down completely randomly.
Pair Corralation between Barrick Gold and Falcon Metals
Given the investment horizon of 90 days Barrick Gold Corp is expected to under-perform the Falcon Metals. But the stock apears to be less risky and, when comparing its historical volatility, Barrick Gold Corp is 104.85 times less risky than Falcon Metals. The stock trades about -0.27 of its potential returns per unit of risk. The Falcon Metals Limited is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Falcon Metals Limited on August 28, 2024 and sell it today you would lose (6.50) from holding Falcon Metals Limited or give up 46.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Barrick Gold Corp vs. Falcon Metals Limited
Performance |
| Timeline |
| Barrick Gold Corp |
| Falcon Metals Limited |
Barrick Gold and Falcon Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barrick Gold and Falcon Metals
The main advantage of trading using opposite Barrick Gold and Falcon Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barrick Gold position performs unexpectedly, Falcon 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 Falcon Metals will offset losses from the drop in Falcon Metals' long position.The idea behind Barrick Gold Corp and Falcon Metals Limited 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.| Falcon Metals vs. Aurion Resources | Falcon Metals vs. Liberty Gold Corp | Falcon Metals vs. Orezone Gold Corp | Falcon Metals vs. Radisson Mining Resources |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| CEOs Directory Screen CEOs from public companies around the world |