Correlation Between National Vision and Barrick Gold

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

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

Diversification Opportunities for National Vision and Barrick Gold

0.85

Correlation Coefficient

National Vision  Barrick Gold

Very poor diversification

The 3 months correlation between National and Barrick is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding National Vision Holdings and Barrick Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrick Gold Corp and National Vision 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 National Vision Holdings 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 Corp has no effect on the direction of National Vision i.e., National Vision and Barrick Gold go up and down completely randomly.

Pair Corralation between National Vision and Barrick Gold

Considering the 90-day investment horizon National Vision Holdings is expected to generate 1.57 times more return on investment than Barrick Gold. However, National Vision is 1.57 times more volatile than Barrick Gold Corp. It trades about 0.17 of its potential returns per unit of risk. Barrick Gold Corp is currently generating about 0.23 per unit of risk. If you would invest  1,010  in National Vision Holdings on December 29, 2024 and sell it today you would earn a total of  316.00  from holding National Vision Holdings or generate 31.29% return on investment over 90 days.

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

National Vision Holdings  vs.  Barrick Gold Corp

National Vision Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in National Vision Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, National Vision exhibited solid returns over the last few months and may actually be approaching a breakup point.

Barrick Gold Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Barrick Gold Corp are ranked lower than 17 (%) 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.

Pair Trading with National Vision and Barrick Gold

The main advantage of trading using opposite National Vision and Barrick Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Vision 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 National Vision Holdings and Barrick Gold Corp 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.