Correlation Between Barrick Gold and Ramelius Resources
Can any of the company-specific risk be diversified away by investing in both Barrick Gold and Ramelius Resources 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 Ramelius Resources 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 Ramelius Resources, you can compare the effects of market volatilities on Barrick Gold and Ramelius Resources 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 Ramelius Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and Ramelius Resources.
Diversification Opportunities for Barrick Gold and Ramelius Resources
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Barrick and Ramelius is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Ramelius Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ramelius Resources 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 Ramelius Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ramelius Resources has no effect on the direction of Barrick Gold i.e., Barrick Gold and Ramelius Resources go up and down completely randomly.
Pair Corralation between Barrick Gold and Ramelius Resources
Given the investment horizon of 90 days Barrick Gold is expected to generate 6.59 times less return on investment than Ramelius Resources. But when comparing it to its historical volatility, Barrick Gold Corp is 1.91 times less risky than Ramelius Resources. It trades about 0.07 of its potential returns per unit of risk. Ramelius Resources is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 105.00 in Ramelius Resources on January 28, 2024 and sell it today you would earn a total of 22.00 from holding Ramelius Resources or generate 20.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Barrick Gold Corp vs. Ramelius Resources
Performance |
Timeline |
Barrick Gold Corp |
Ramelius Resources |
Barrick Gold and Ramelius Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Barrick Gold and Ramelius Resources
The main advantage of trading using opposite Barrick Gold and Ramelius Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barrick Gold position performs unexpectedly, Ramelius Resources 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 Ramelius Resources will offset losses from the drop in Ramelius Resources' long position.Barrick Gold vs. K92 Mining | Barrick Gold vs. Treasury Metals | Barrick Gold vs. Moneta Gold | Barrick Gold vs. Wesdome Gold 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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