Correlation Between Shelf Drilling and Barrick Gold

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

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

Diversification Opportunities for Shelf Drilling and Barrick Gold

-0.81

Correlation Coefficient

Shelf Drilling  Barrick Gold

Pay attention - limited upside

The 3 months correlation between Shelf and Barrick is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Shelf Drilling 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 Shelf Drilling 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 Shelf Drilling 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 Shelf Drilling i.e., Shelf Drilling and Barrick Gold go up and down completely randomly.

Pair Corralation between Shelf Drilling and Barrick Gold

Assuming the 90 days horizon Shelf Drilling is expected to under-perform the Barrick Gold. In addition to that, Shelf Drilling is 2.75 times more volatile than Barrick Gold Corp. It trades about -0.19 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  1,664  in Barrick Gold Corp on January 28, 2024 and sell it today you would earn a total of  45.00  from holding Barrick Gold Corp or generate 2.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Shelf Drilling  vs.  Barrick Gold Corp

Shelf Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shelf Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Barrick Gold Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Barrick Gold Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Barrick Gold may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Shelf Drilling and Barrick Gold

The main advantage of trading using opposite Shelf Drilling and Barrick Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shelf Drilling 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.

The idea behind Shelf Drilling and Barrick Gold 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..