Correlation Between Barrick Gold and Red Pine
Can any of the company-specific risk be diversified away by investing in both Barrick Gold and Red Pine 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 Red Pine 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 Red Pine Exploration, you can compare the effects of market volatilities on Barrick Gold and Red Pine 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 Red Pine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and Red Pine.
Diversification Opportunities for Barrick Gold and Red Pine
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barrick and Red is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Red Pine Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Pine Exploration 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 Red Pine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Pine Exploration has no effect on the direction of Barrick Gold i.e., Barrick Gold and Red Pine go up and down completely randomly.
Pair Corralation between Barrick Gold and Red Pine
Assuming the 90 days trading horizon Barrick Gold Corp is expected to under-perform the Red Pine. But the stock apears to be less risky and, when comparing its historical volatility, Barrick Gold Corp is 3.37 times less risky than Red Pine. The stock trades about 0.0 of its potential returns per unit of risk. The Red Pine Exploration is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 40.00 in Red Pine Exploration on January 27, 2024 and sell it today you would lose (20.00) from holding Red Pine Exploration or give up 50.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Barrick Gold Corp vs. Red Pine Exploration
Performance |
Timeline |
Barrick Gold Corp |
Red Pine Exploration |
Barrick Gold and Red Pine Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Barrick Gold and Red Pine
The main advantage of trading using opposite Barrick Gold and Red Pine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barrick Gold position performs unexpectedly, Red Pine 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 Red Pine will offset losses from the drop in Red Pine's long position.Barrick Gold vs. Royal Bank of | Barrick Gold vs. Royal Bank of | Barrick Gold vs. Royal Bank of | Barrick Gold vs. Toronto Dominion Bank Pref |
Red Pine vs. Royal Bank of | Red Pine vs. Royal Bank of | Red Pine vs. Royal Bank of | Red Pine vs. Toronto Dominion Bank Pref |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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