Correlation Between Barrick Gold and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both Barrick Gold and Iridium Communications 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 Iridium Communications 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 Iridium Communications, you can compare the effects of market volatilities on Barrick Gold and Iridium Communications 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 Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and Iridium Communications.
Diversification Opportunities for Barrick Gold and Iridium Communications
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barrick and Iridium is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications 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 Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of Barrick Gold i.e., Barrick Gold and Iridium Communications go up and down completely randomly.
Pair Corralation between Barrick Gold and Iridium Communications
Given the investment horizon of 90 days Barrick Gold is expected to generate 1.25 times less return on investment than Iridium Communications. But when comparing it to its historical volatility, Barrick Gold Corp is 1.44 times less risky than Iridium Communications. It trades about 0.09 of its potential returns per unit of risk. Iridium Communications is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,978 in Iridium Communications on September 13, 2024 and sell it today you would earn a total of 106.00 from holding Iridium Communications or generate 3.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barrick Gold Corp vs. Iridium Communications
Performance |
| Timeline |
| Barrick Gold Corp |
| Iridium Communications |
Barrick Gold and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barrick Gold and Iridium Communications
The main advantage of trading using opposite Barrick Gold and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barrick Gold position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' 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 |
| Iridium Communications vs. IHS Holding | Iridium Communications vs. Cogent Communications Group | Iridium Communications vs. IDT Corporation | Iridium Communications vs. Cable One |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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