Correlation Between Barrick Gold and Newmont

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

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

Diversification Opportunities for Barrick Gold and Newmont

0.92

Correlation Coefficient

Barrick Gold  Newmont

Almost no diversification

The 3 months correlation between Barrick and Newmont is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold and Newmont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont 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 are associated (or correlated) with Newmont. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont has no effect on the direction of Barrick Gold i.e., Barrick Gold and Newmont go up and down completely randomly.

Pair Corralation between Barrick Gold and Newmont

Assuming the 90 days horizon Barrick Gold is expected to under-perform the Newmont. In addition to that, Barrick Gold is 1.12 times more volatile than Newmont. It trades about -0.38 of its total potential returns per unit of risk. Newmont is currently generating about -0.4 per unit of volatility. If you would invest  4,118  in Newmont on September 22, 2024 and sell it today you would lose (563.00) from holding Newmont or give up 13.67% of portfolio value over 90 days.

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

Barrick Gold  vs.  Newmont

Barrick Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barrick Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Newmont

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newmont has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Barrick Gold and Newmont

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

The idea behind Barrick Gold and Newmont 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.