Correlation Between Barrick Gold and Wheaton Precious
Can any of the company-specific risk be diversified away by investing in both Barrick Gold and Wheaton Precious 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 Wheaton Precious 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 Wheaton Precious Metals, you can compare the effects of market volatilities on Barrick Gold and Wheaton Precious 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 Wheaton Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and Wheaton Precious.
Diversification Opportunities for Barrick Gold and Wheaton Precious
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Barrick and Wheaton is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Wheaton Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wheaton Precious Metals 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 Wheaton Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wheaton Precious Metals has no effect on the direction of Barrick Gold i.e., Barrick Gold and Wheaton Precious go up and down completely randomly.
Pair Corralation between Barrick Gold and Wheaton Precious
Given the investment horizon of 90 days Barrick Gold is expected to generate 2.79 times less return on investment than Wheaton Precious. In addition to that, Barrick Gold is 1.04 times more volatile than Wheaton Precious Metals. It trades about 0.03 of its total potential returns per unit of risk. Wheaton Precious Metals is currently generating about 0.08 per unit of volatility. If you would invest 4,729 in Wheaton Precious Metals on November 9, 2024 and sell it today you would earn a total of 1,958 from holding Wheaton Precious Metals or generate 41.4% 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. Wheaton Precious Metals
Performance |
| Timeline |
| Barrick Gold Corp |
| Wheaton Precious Metals |
Barrick Gold and Wheaton Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barrick Gold and Wheaton Precious
The main advantage of trading using opposite Barrick Gold and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barrick Gold position performs unexpectedly, Wheaton Precious 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 Wheaton Precious will offset losses from the drop in Wheaton Precious' 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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