Correlation Between Barrick Gold and Regis Resources

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

Diversification Opportunities for Barrick Gold and Regis Resources

0.8

Correlation Coefficient

Barrick Gold  Regis Resources

Very poor diversification

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

Pair Corralation between Barrick Gold and Regis Resources

Given the investment horizon of 90 days Barrick Gold is expected to generate 2.0 times less return on investment than Regis Resources. But when comparing it to its historical volatility, Barrick Gold Corp is 3.16 times less risky than Regis Resources. It trades about 0.23 of its potential returns per unit of risk. Regis Resources is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  154.00  in Regis Resources on December 29, 2024 and sell it today you would earn a total of  77.00  from holding Regis Resources or generate 50.0% return on investment over 90 days.

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

Barrick Gold Corp  vs.  Regis Resources

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.

Regis Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Regis Resources are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Regis Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barrick Gold and Regis Resources

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

The idea behind Barrick Gold Corp and Regis Resources 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.