Correlation Between Barrick Gold and Lion One

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

Diversification Opportunities for Barrick Gold and Lion One

0.15

Correlation Coefficient

Barrick Gold  Lion One

Average diversification

The 3 months correlation between Barrick and Lion is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Barrick Gold i.e., Barrick Gold and Lion One go up and down completely randomly.

Pair Corralation between Barrick Gold and Lion One

Given the investment horizon of 90 days Barrick Gold Corp is expected to generate 0.33 times more return on investment than Lion One. However, Barrick Gold Corp is 3.03 times less risky than Lion One. It trades about 0.04 of its potential returns per unit of risk. Lion One Metals is currently generating about 0.0 per unit of risk. If you would invest  1,749  in Barrick Gold Corp on November 28, 2024 and sell it today you would earn a total of  60.00  from holding Barrick Gold Corp or generate 3.43% return on investment over 90 days.

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

Barrick Gold Corp  vs.  Lion One Metals

Barrick Gold Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Barrick Gold Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Barrick Gold is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Lion One Metals

Risk-Adjusted Performance

Weak

Over the last 90 days Lion One Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Lion One is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Barrick Gold and Lion One

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

The idea behind Barrick Gold Corp and Lion One Metals 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.