Correlation Between Barrick Gold and Orogen Royalties

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

Diversification Opportunities for Barrick Gold and Orogen Royalties

0.8

Correlation Coefficient

Barrick Gold  Orogen Royalties

Very poor diversification

The 3 months correlation between Barrick and Orogen is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Orogen Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orogen Royalties 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 Orogen Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orogen Royalties has no effect on the direction of Barrick Gold i.e., Barrick Gold and Orogen Royalties go up and down completely randomly.

Pair Corralation between Barrick Gold and Orogen Royalties

Given the investment horizon of 90 days Barrick Gold Corp is expected to under-perform the Orogen Royalties. But the stock apears to be less risky and, when comparing its historical volatility, Barrick Gold Corp is 1.33 times less risky than Orogen Royalties. The stock trades about -0.19 of its potential returns per unit of risk. The Orogen Royalties is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  97.00  in Orogen Royalties on October 10, 2024 and sell it today you would lose (2.00) from holding Orogen Royalties or give up 2.06% of portfolio value over 90 days.

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

Barrick Gold Corp  vs.  Orogen Royalties

Barrick Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barrick Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Orogen Royalties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orogen Royalties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Barrick Gold and Orogen Royalties

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

The idea behind Barrick Gold Corp and Orogen Royalties 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.