Correlation Between United States and Barrick Gold
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and Barrick Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Barrick Gold Corp, you can compare the effects of market volatilities on United States 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 United States with a short position of Barrick Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Barrick Gold.
Diversification Opportunities for United States and Barrick Gold
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Barrick is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel 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 United States 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 United States Steel 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 United States i.e., United States and Barrick Gold go up and down completely randomly.
Pair Corralation between United States and Barrick Gold
Taking into account the 90-day investment horizon United States Steel is expected to generate 1.64 times more return on investment than Barrick Gold. However, United States is 1.64 times more volatile than Barrick Gold Corp. It trades about 0.03 of its potential returns per unit of risk. Barrick Gold Corp is currently generating about -0.01 per unit of risk. If you would invest 2,800 in United States Steel on October 20, 2024 and sell it today you would earn a total of 804.00 from holding United States Steel or generate 28.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Barrick Gold Corp
Performance |
| Timeline |
| United States Steel |
| Barrick Gold Corp |
United States and Barrick Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Barrick Gold
The main advantage of trading using opposite United States and Barrick Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.| United States vs. Nucor Corp | United States vs. Steel Dynamics | United States vs. ArcelorMittal SA ADR | United States vs. Gerdau SA ADR |
| Barrick Gold vs. Agnico Eagle Mines | Barrick Gold vs. Pan American Silver | Barrick Gold vs. Wheaton Precious Metals | Barrick Gold vs. Kinross Gold |
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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