Correlation Between Barrick Gold and Kinross Gold

Can any of the company-specific risk be diversified away by investing in both Barrick Gold and Kinross 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 Barrick Gold and Kinross Gold 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 Kinross Gold, you can compare the effects of market volatilities on Barrick Gold and Kinross 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 Barrick Gold with a short position of Kinross Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and Kinross Gold.

Diversification Opportunities for Barrick Gold and Kinross Gold

0.78

Correlation Coefficient

Barrick Gold  Kinross Gold

Poor diversification

The 3 months correlation between Barrick and Kinross is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Kinross Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinross Gold 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 Kinross Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinross Gold has no effect on the direction of Barrick Gold i.e., Barrick Gold and Kinross Gold go up and down completely randomly.

Pair Corralation between Barrick Gold and Kinross Gold

Given the investment horizon of 90 days Barrick Gold is expected to generate 1.32 times less return on investment than Kinross Gold. But when comparing it to its historical volatility, Barrick Gold Corp is 1.42 times less risky than Kinross Gold. It trades about 0.23 of its potential returns per unit of risk. Kinross Gold is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  917.00  in Kinross Gold on December 29, 2024 and sell it today you would earn a total of  334.00  from holding Kinross Gold or generate 36.42% return on investment over 90 days.

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

Barrick Gold Corp  vs.  Kinross Gold

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.

Kinross Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinross Gold are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Kinross Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barrick Gold and Kinross Gold

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

The idea behind Barrick Gold Corp and Kinross 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.