Correlation Between Barrick Gold and Fosterville South
Can any of the company-specific risk be diversified away by investing in both Barrick Gold and Fosterville South 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 Fosterville South 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 Fosterville South Exploration, you can compare the effects of market volatilities on Barrick Gold and Fosterville South 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 Fosterville South. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and Fosterville South.
Diversification Opportunities for Barrick Gold and Fosterville South
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Barrick and Fosterville is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Fosterville South Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fosterville South 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 Fosterville South. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fosterville South has no effect on the direction of Barrick Gold i.e., Barrick Gold and Fosterville South go up and down completely randomly.
Pair Corralation between Barrick Gold and Fosterville South
Given the investment horizon of 90 days Barrick Gold Corp is expected to generate 0.42 times more return on investment than Fosterville South. However, Barrick Gold Corp is 2.37 times less risky than Fosterville South. It trades about 0.01 of its potential returns per unit of risk. Fosterville South Exploration is currently generating about -0.08 per unit of risk. If you would invest 1,733 in Barrick Gold Corp on September 1, 2024 and sell it today you would earn a total of 16.00 from holding Barrick Gold Corp or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barrick Gold Corp vs. Fosterville South Exploration
Performance |
| Timeline |
| Barrick Gold Corp |
| Fosterville South |
Barrick Gold and Fosterville South Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barrick Gold and Fosterville South
The main advantage of trading using opposite Barrick Gold and Fosterville South positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barrick Gold position performs unexpectedly, Fosterville South 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 Fosterville South will offset losses from the drop in Fosterville South'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 |
| Fosterville South vs. Aurion Resources | Fosterville South vs. Rio2 Limited | Fosterville South vs. Palamina Corp | Fosterville South vs. BTU Metals Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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