Correlation Between Barrick Gold and Pentair PLC
Can any of the company-specific risk be diversified away by investing in both Barrick Gold and Pentair PLC 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 Pentair PLC 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 Pentair PLC, you can compare the effects of market volatilities on Barrick Gold and Pentair PLC 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 Pentair PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and Pentair PLC.
Diversification Opportunities for Barrick Gold and Pentair PLC
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Barrick and Pentair is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC 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 Pentair PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pentair PLC has no effect on the direction of Barrick Gold i.e., Barrick Gold and Pentair PLC go up and down completely randomly.
Pair Corralation between Barrick Gold and Pentair PLC
Given the investment horizon of 90 days Barrick Gold is expected to generate 8.56 times less return on investment than Pentair PLC. In addition to that, Barrick Gold is 1.25 times more volatile than Pentair PLC. It trades about 0.01 of its total potential returns per unit of risk. Pentair PLC is currently generating about 0.15 per unit of volatility. If you would invest 7,949 in Pentair PLC on September 1, 2024 and sell it today you would earn a total of 2,950 from holding Pentair PLC or generate 37.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barrick Gold Corp vs. Pentair PLC
Performance |
| Timeline |
| Barrick Gold Corp |
| Pentair PLC |
Barrick Gold and Pentair PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barrick Gold and Pentair PLC
The main advantage of trading using opposite Barrick Gold and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barrick Gold position performs unexpectedly, Pentair PLC 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 Pentair PLC will offset losses from the drop in Pentair PLC'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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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