Correlation Between Royal Gold and Barrick Gold
Can any of the company-specific risk be diversified away by investing in both Royal 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 Royal 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 Royal Gold and Barrick Gold Corp, you can compare the effects of market volatilities on Royal 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 Royal Gold with a short position of Barrick Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Gold and Barrick Gold.
Diversification Opportunities for Royal Gold and Barrick Gold
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Royal and Barrick is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Royal 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 Royal 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 Royal 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 Royal Gold i.e., Royal Gold and Barrick Gold go up and down completely randomly.
Pair Corralation between Royal Gold and Barrick Gold
Given the investment horizon of 90 days Royal Gold is expected to generate 1.55 times less return on investment than Barrick Gold. In addition to that, Royal Gold is 1.09 times more volatile than Barrick Gold Corp. It trades about 0.04 of its total potential returns per unit of risk. Barrick Gold Corp is currently generating about 0.07 per unit of volatility. If you would invest 1,548 in Barrick Gold Corp on January 20, 2024 and sell it today you would earn a total of 122.00 from holding Barrick Gold Corp or generate 7.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.41% |
| Values | Daily Returns |
Royal Gold vs. Barrick Gold Corp
Performance |
| Timeline |
| Royal Gold |
| Barrick Gold Corp |
Royal Gold and Barrick Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Gold and Barrick Gold
The main advantage of trading using opposite Royal Gold and Barrick Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal 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.| Royal Gold vs. Franco Nevada | Royal Gold vs. Osisko Gold Ro | Royal Gold vs. Fortuna Silver Mines | Royal Gold vs. Alamos Gold |
| Barrick Gold vs. Franco Nevada | Barrick Gold vs. Osisko Gold Ro | Barrick Gold vs. Royal Gold | Barrick Gold vs. Fortuna Silver Mines |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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