Correlation Between Barrick Gold and Gerdau SA
Can any of the company-specific risk be diversified away by investing in both Barrick Gold and Gerdau SA 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 Gerdau SA 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 Gerdau SA ADR, you can compare the effects of market volatilities on Barrick Gold and Gerdau SA 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 Gerdau SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and Gerdau SA.
Diversification Opportunities for Barrick Gold and Gerdau SA
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barrick and Gerdau is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Gerdau SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gerdau SA ADR 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 Gerdau SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gerdau SA ADR has no effect on the direction of Barrick Gold i.e., Barrick Gold and Gerdau SA go up and down completely randomly.
Pair Corralation between Barrick Gold and Gerdau SA
Given the investment horizon of 90 days Barrick Gold Corp is expected to generate 0.7 times more return on investment than Gerdau SA. However, Barrick Gold Corp is 1.42 times less risky than Gerdau SA. It trades about 0.26 of its potential returns per unit of risk. Gerdau SA ADR is currently generating about 0.1 per unit of risk. If you would invest 1,584 in Barrick Gold Corp on November 9, 2024 and sell it today you would earn a total of 120.00 from holding Barrick Gold Corp or generate 7.58% 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. Gerdau SA ADR
Performance |
| Timeline |
| Barrick Gold Corp |
| Gerdau SA ADR |
Barrick Gold and Gerdau SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barrick Gold and Gerdau SA
The main advantage of trading using opposite Barrick Gold and Gerdau SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barrick Gold position performs unexpectedly, Gerdau SA 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 Gerdau SA will offset losses from the drop in Gerdau SA'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 |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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