Correlation Between Barrick Gold and Skechers USA
Can any of the company-specific risk be diversified away by investing in both Barrick Gold and Skechers USA 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 Skechers USA 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 Skechers USA, you can compare the effects of market volatilities on Barrick Gold and Skechers USA 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 Skechers USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and Skechers USA.
Diversification Opportunities for Barrick Gold and Skechers USA
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Barrick and Skechers is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA 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 Skechers USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skechers USA has no effect on the direction of Barrick Gold i.e., Barrick Gold and Skechers USA go up and down completely randomly.
Pair Corralation between Barrick Gold and Skechers USA
Given the investment horizon of 90 days Barrick Gold Corp is expected to under-perform the Skechers USA. But the stock apears to be less risky and, when comparing its historical volatility, Barrick Gold Corp is 1.3 times less risky than Skechers USA. The stock trades about -0.05 of its potential returns per unit of risk. The Skechers USA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6,608 in Skechers USA on September 6, 2024 and sell it today you would earn a total of 457.00 from holding Skechers USA or generate 6.92% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Barrick Gold Corp vs. Skechers USA
Performance |
Timeline |
Barrick Gold Corp |
Skechers USA |
Barrick Gold and Skechers USA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Barrick Gold and Skechers USA
The main advantage of trading using opposite Barrick Gold and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barrick Gold position performs unexpectedly, Skechers USA 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 Skechers USA will offset losses from the drop in Skechers USA's long position.Barrick Gold vs. Morningstar Unconstrained Allocation | Barrick Gold vs. Thrivent High Yield | Barrick Gold vs. LiCycle Holdings Corp | Barrick Gold vs. SEI Investments |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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