Correlation Between Barrick Gold and Bausch Lomb
Can any of the company-specific risk be diversified away by investing in both Barrick Gold and Bausch Lomb 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 Bausch Lomb 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 Bausch Lomb Corp, you can compare the effects of market volatilities on Barrick Gold and Bausch Lomb 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 Bausch Lomb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and Bausch Lomb.
Diversification Opportunities for Barrick Gold and Bausch Lomb
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barrick and Bausch is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Bausch Lomb Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bausch Lomb Corp 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 Bausch Lomb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bausch Lomb Corp has no effect on the direction of Barrick Gold i.e., Barrick Gold and Bausch Lomb go up and down completely randomly.
Pair Corralation between Barrick Gold and Bausch Lomb
Given the investment horizon of 90 days Barrick Gold Corp is expected to generate 0.86 times more return on investment than Bausch Lomb. However, Barrick Gold Corp is 1.16 times less risky than Bausch Lomb. It trades about 0.02 of its potential returns per unit of risk. Bausch Lomb Corp is currently generating about 0.01 per unit of risk. If you would invest 1,558 in Barrick Gold Corp on September 9, 2024 and sell it today you would earn a total of 119.00 from holding Barrick Gold Corp or generate 7.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Barrick Gold Corp vs. Bausch Lomb Corp
Performance |
Timeline |
Barrick Gold Corp |
Bausch Lomb Corp |
Barrick Gold and Bausch Lomb Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Barrick Gold and Bausch Lomb
The main advantage of trading using opposite Barrick Gold and Bausch Lomb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barrick Gold position performs unexpectedly, Bausch Lomb 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 Bausch Lomb will offset losses from the drop in Bausch Lomb's long position.Barrick Gold vs. Wheaton Precious Metals | Barrick Gold vs. Royal Gold | Barrick Gold vs. Fortuna Silver Mines | Barrick Gold vs. Centerra Gold |
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Check out your portfolio center.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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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