Correlation Between Summit Materials and Barrick Gold
Can any of the company-specific risk be diversified away by investing in both Summit Materials 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 Summit Materials and Barrick Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Barrick Gold Corp, you can compare the effects of market volatilities on Summit Materials 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 Summit Materials with a short position of Barrick Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Barrick Gold.
Diversification Opportunities for Summit Materials and Barrick Gold
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Summit and Barrick is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials 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 Summit Materials 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 Summit Materials 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 Summit Materials i.e., Summit Materials and Barrick Gold go up and down completely randomly.
Pair Corralation between Summit Materials and Barrick Gold
Considering the 90-day investment horizon Summit Materials is expected to generate 1.03 times more return on investment than Barrick Gold. However, Summit Materials is 1.03 times more volatile than Barrick Gold Corp. It trades about 0.11 of its potential returns per unit of risk. Barrick Gold Corp is currently generating about 0.03 per unit of risk. If you would invest 3,880 in Summit Materials on August 24, 2024 and sell it today you would earn a total of 1,236 from holding Summit Materials or generate 31.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. Barrick Gold Corp
Performance |
| Timeline |
| Summit Materials |
| Barrick Gold Corp |
Summit Materials and Barrick Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Barrick Gold
The main advantage of trading using opposite Summit Materials and Barrick Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials 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.| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
| Barrick Gold vs. Agnico Eagle Mines | Barrick Gold vs. Pan American Silver | Barrick Gold vs. Kinross Gold | Barrick Gold vs. B2Gold Corp |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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