Correlation Between Barrick Gold and Talanx AG

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

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

Diversification Opportunities for Barrick Gold and Talanx AG

0.74

Correlation Coefficient

Barrick Gold  Talanx AG

Poor diversification

The 3 months correlation between Barrick and Talanx is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold and Talanx AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talanx AG 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 Talanx AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talanx AG has no effect on the direction of Barrick Gold i.e., Barrick Gold and Talanx AG go up and down completely randomly.

Pair Corralation between Barrick Gold and Talanx AG

Assuming the 90 days horizon Barrick Gold is expected to generate 1.43 times more return on investment than Talanx AG. However, Barrick Gold is 1.43 times more volatile than Talanx AG. It trades about 0.16 of its potential returns per unit of risk. Talanx AG is currently generating about 0.22 per unit of risk. If you would invest  1,494  in Barrick Gold on December 29, 2024 and sell it today you would earn a total of  304.00  from holding Barrick Gold or generate 20.35% return on investment over 90 days.

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

Barrick Gold  vs.  Talanx AG

Barrick Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barrick Gold are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Barrick Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Talanx AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Talanx AG are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Talanx AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barrick Gold and Talanx AG

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

The idea behind Barrick Gold and Talanx AG 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.