Correlation Between XLMedia PLC and Barrick Gold

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

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

Diversification Opportunities for XLMedia PLC and Barrick Gold

0.42

Correlation Coefficient

XLMedia PLC  Barrick Gold

Very weak diversification

The 3 months correlation between XLMedia and Barrick is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and Barrick Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrick Gold and XLMedia PLC 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 XLMedia PLC 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 has no effect on the direction of XLMedia PLC i.e., XLMedia PLC and Barrick Gold go up and down completely randomly.

Pair Corralation between XLMedia PLC and Barrick Gold

Assuming the 90 days horizon XLMedia PLC is expected to under-perform the Barrick Gold. In addition to that, XLMedia PLC is 1.34 times more volatile than Barrick Gold. It trades about -0.11 of its total potential returns per unit of risk. Barrick Gold is currently generating about 0.13 per unit of volatility. If you would invest  1,580  in Barrick Gold on December 2, 2024 and sell it today you would earn a total of  99.00  from holding Barrick Gold or generate 6.27% return on investment over 90 days.

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

XLMedia PLC  vs.  Barrick Gold

XLMedia PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days XLMedia PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Barrick Gold

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Barrick Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Barrick Gold is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with XLMedia PLC and Barrick Gold

The main advantage of trading using opposite XLMedia PLC and Barrick Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XLMedia PLC 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 XLMedia PLC and Barrick Gold 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.