Correlation Between Barrick Gold and Orea Mining

Can any of the company-specific risk be diversified away by investing in both Barrick Gold and Orea Mining 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 Barrick Gold and Orea Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Barrick Gold Corp and Orea Mining Corp, you can compare the effects of market volatilities on Barrick Gold and Orea Mining 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 Barrick Gold with a short position of Orea Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and Orea Mining.

Diversification Opportunities for Barrick Gold and Orea Mining

-0.21

Correlation Coefficient

Barrick Gold  Orea Mining

Very good diversification

The 3 months correlation between Barrick and Orea is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Orea Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orea Mining Corp and Barrick 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 Barrick Gold Corp are associated (or correlated) with Orea Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orea Mining Corp has no effect on the direction of Barrick Gold i.e., Barrick Gold and Orea Mining go up and down completely randomly.

Pair Corralation between Barrick Gold and Orea Mining

If you would invest  0.00  in Orea Mining Corp on March 21, 2024 and sell it today you would earn a total of  0.00  from holding Orea Mining Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Barrick Gold Corp  vs.  Orea Mining Corp

Barrick Gold Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Barrick Gold Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Barrick Gold is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Orea Mining Corp

Risk-Adjusted Performance

8 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Orea Mining Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Orea Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barrick Gold and Orea Mining

The main advantage of trading using opposite Barrick Gold and Orea Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barrick Gold position performs unexpectedly, Orea Mining 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 Orea Mining will offset losses from the drop in Orea Mining's long position.

The idea behind Barrick Gold Corp and Orea Mining Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.