Correlation Between Barrick Gold and Soma Gold

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

Diversification Opportunities for Barrick Gold and Soma Gold

0.54

Correlation Coefficient

Barrick Gold  Soma Gold

Very weak diversification

The 3 months correlation between Barrick and Soma is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Soma Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soma Gold Corp 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 Soma Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soma Gold Corp has no effect on the direction of Barrick Gold i.e., Barrick Gold and Soma Gold go up and down completely randomly.

Pair Corralation between Barrick Gold and Soma Gold

Given the investment horizon of 90 days Barrick Gold Corp is expected to generate 0.58 times more return on investment than Soma Gold. However, Barrick Gold Corp is 1.74 times less risky than Soma Gold. It trades about -0.19 of its potential returns per unit of risk. Soma Gold Corp is currently generating about -0.11 per unit of risk. If you would invest  1,950  in Barrick Gold Corp on October 25, 2024 and sell it today you would lose (373.00) from holding Barrick Gold Corp or give up 19.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.16%
Values	Daily Returns

Barrick Gold Corp  vs.  Soma Gold Corp

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.

Soma Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Soma Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Barrick Gold and Soma Gold

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

The idea behind Barrick Gold Corp and Soma Gold Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.