Correlation Between Barrick Gold and Aboitiz Power

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

Diversification Opportunities for Barrick Gold and Aboitiz Power

0.67

Correlation Coefficient

Barrick Gold  Aboitiz Power

Poor diversification

The 3 months correlation between Barrick and Aboitiz is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Aboitiz Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aboitiz Power 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 Aboitiz Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aboitiz Power has no effect on the direction of Barrick Gold i.e., Barrick Gold and Aboitiz Power go up and down completely randomly.

Pair Corralation between Barrick Gold and Aboitiz Power

If you would invest  1,676  in Barrick Gold Corp on June 22, 2024 and sell it today you would earn a total of  364.00  from holding Barrick Gold Corp or generate 21.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.2%
Values	Daily Returns

Barrick Gold Corp  vs.  Aboitiz Power

Barrick Gold Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barrick Gold Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, Barrick Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aboitiz Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aboitiz Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Aboitiz Power is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Barrick Gold and Aboitiz Power

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

The idea behind Barrick Gold Corp and Aboitiz Power 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.