Correlation Between Barloworld and GraniteShares Gold

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

By analyzing existing cross correlation between Barloworld Ltd ADR and GraniteShares Gold Trust, you can compare the effects of market volatilities on Barloworld and GraniteShares 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 Barloworld with a short position of GraniteShares Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and GraniteShares Gold.

Diversification Opportunities for Barloworld and GraniteShares Gold

-0.4

Correlation Coefficient

Barloworld  GraniteShares Gold

Very good diversification

The 3 months correlation between Barloworld and GraniteShares is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and GraniteShares Gold Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares Gold Trust and Barloworld 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 Barloworld Ltd ADR are associated (or correlated) with GraniteShares Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares Gold Trust has no effect on the direction of Barloworld i.e., Barloworld and GraniteShares Gold go up and down completely randomly.

Pair Corralation between Barloworld and GraniteShares Gold

Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 6.12 times more return on investment than GraniteShares Gold. However, Barloworld is 6.12 times more volatile than GraniteShares Gold Trust. It trades about 0.14 of its potential returns per unit of risk. GraniteShares Gold Trust is currently generating about -0.04 per unit of risk. If you would invest  354.00  in Barloworld Ltd ADR on February 5, 2024 and sell it today you would earn a total of  57.00  from holding Barloworld Ltd ADR or generate 16.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Barloworld Ltd ADR  vs.  GraniteShares Gold Trust

Barloworld ADR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Barloworld Ltd ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Barloworld is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

GraniteShares Gold Trust

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares Gold Trust are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, GraniteShares Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barloworld and GraniteShares Gold

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

The idea behind Barloworld Ltd ADR and GraniteShares Gold Trust 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.