Correlation Between Barrick Gold and Safehold

Can any of the company-specific risk be diversified away by investing in both Barrick Gold and Safehold 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 Safehold 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 Safehold, you can compare the effects of market volatilities on Barrick Gold and Safehold 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 Safehold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and Safehold.

Diversification Opportunities for Barrick Gold and Safehold

-0.43

Correlation Coefficient

Barrick Gold  Safehold

Very good diversification

The 3 months correlation between Barrick and Safehold is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Safehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safehold 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 Safehold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safehold has no effect on the direction of Barrick Gold i.e., Barrick Gold and Safehold go up and down completely randomly.

Pair Corralation between Barrick Gold and Safehold

Given the investment horizon of 90 days Barrick Gold Corp is expected to generate 0.83 times more return on investment than Safehold. However, Barrick Gold Corp is 1.2 times less risky than Safehold. It trades about 0.04 of its potential returns per unit of risk. Safehold is currently generating about -0.16 per unit of risk. If you would invest  1,686  in Barrick Gold Corp on January 30, 2024 and sell it today you would earn a total of  23.00  from holding Barrick Gold Corp or generate 1.36% return on investment over 90 days.

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

Barrick Gold Corp  vs.  Safehold

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 unfluctuating essential indicators, Barrick Gold may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Safehold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safehold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Barrick Gold and Safehold

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

The idea behind Barrick Gold Corp and Safehold 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.