Correlation Between New Gold and Barrick Gold
Can any of the company-specific risk be diversified away by investing in both New Gold and Barrick Gold 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 New Gold and Barrick Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Gold and Barrick Gold Corp, you can compare the effects of market volatilities on New Gold and Barrick Gold 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 New Gold with a short position of Barrick Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Gold and Barrick Gold.
Diversification Opportunities for New Gold and Barrick Gold
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Barrick is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding New Gold and Barrick Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrick Gold Corp and New 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 New Gold are associated (or correlated) with Barrick Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrick Gold Corp has no effect on the direction of New Gold i.e., New Gold and Barrick Gold go up and down completely randomly.
Pair Corralation between New Gold and Barrick Gold
Considering the 90-day investment horizon New Gold is expected to generate 1.92 times more return on investment than Barrick Gold. However, New Gold is 1.92 times more volatile than Barrick Gold Corp. It trades about 0.22 of its potential returns per unit of risk. Barrick Gold Corp is currently generating about 0.08 per unit of risk. If you would invest 248.00 in New Gold on September 14, 2024 and sell it today you would earn a total of 39.00 from holding New Gold or generate 15.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Gold vs. Barrick Gold Corp
Performance |
| Timeline |
| New Gold |
| Barrick Gold Corp |
New Gold and Barrick Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Gold and Barrick Gold
The main advantage of trading using opposite New Gold and Barrick Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Gold position performs unexpectedly, Barrick Gold 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 Barrick Gold will offset losses from the drop in Barrick Gold's long position.| New Gold vs. Eldorado Gold Corp | New Gold vs. Kinross Gold | New Gold vs. Harmony Gold Mining | New Gold vs. Coeur Mining |
| Barrick Gold vs. Fortitude Gold Corp | Barrick Gold vs. New Gold | Barrick Gold vs. Galiano Gold | Barrick Gold vs. GoldMining |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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