Correlation Between Barrick Gold and Nike
Can any of the company-specific risk be diversified away by investing in both Barrick Gold and Nike 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 Nike 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 Nike Inc, you can compare the effects of market volatilities on Barrick Gold and Nike 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 Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and Nike.
Diversification Opportunities for Barrick Gold and Nike
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barrick and Nike is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of Barrick Gold i.e., Barrick Gold and Nike go up and down completely randomly.
Pair Corralation between Barrick Gold and Nike
Given the investment horizon of 90 days Barrick Gold Corp is expected to generate 1.53 times more return on investment than Nike. However, Barrick Gold is 1.53 times more volatile than Nike Inc. It trades about -0.14 of its potential returns per unit of risk. Nike Inc is currently generating about -0.29 per unit of risk. If you would invest 1,677 in Barrick Gold Corp on October 7, 2024 and sell it today you would lose (93.00) from holding Barrick Gold Corp or give up 5.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barrick Gold Corp vs. Nike Inc
Performance |
| Timeline |
| Barrick Gold Corp |
| Nike Inc |
Barrick Gold and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barrick Gold and Nike
The main advantage of trading using opposite Barrick Gold and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barrick Gold position performs unexpectedly, Nike 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 Nike will offset losses from the drop in Nike'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 |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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