Correlation Between US Gold and Barloworld
Can any of the company-specific risk be diversified away by investing in both US Gold and Barloworld 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 US Gold and Barloworld into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Gold Corp and Barloworld Ltd ADR, you can compare the effects of market volatilities on US Gold and Barloworld 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 US Gold with a short position of Barloworld. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Gold and Barloworld.
Diversification Opportunities for US Gold and Barloworld
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between USAU and Barloworld is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding US Gold Corp and Barloworld Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barloworld ADR and US 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 US Gold Corp are associated (or correlated) with Barloworld. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barloworld ADR has no effect on the direction of US Gold i.e., US Gold and Barloworld go up and down completely randomly.
Pair Corralation between US Gold and Barloworld
Given the investment horizon of 90 days US Gold Corp is expected to under-perform the Barloworld. But the stock apears to be less risky and, when comparing its historical volatility, US Gold Corp is 4.22 times less risky than Barloworld. The stock trades about -0.29 of its potential returns per unit of risk. The Barloworld Ltd ADR is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 423.00 in Barloworld Ltd ADR on October 7, 2024 and sell it today you would earn a total of 238.00 from holding Barloworld Ltd ADR or generate 56.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Gold Corp vs. Barloworld Ltd ADR
Performance |
| Timeline |
| US Gold Corp |
| Barloworld ADR |
US Gold and Barloworld Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Gold and Barloworld
The main advantage of trading using opposite US Gold and Barloworld positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Gold position performs unexpectedly, Barloworld 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 Barloworld will offset losses from the drop in Barloworld's long position.| US Gold vs. Labrador Gold Corp | US Gold vs. Aurion Resources | US Gold vs. Puma Exploration | US Gold vs. Golden Star Resource |
| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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