Correlation Between Barrick Gold and Stepstone

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

Diversification Opportunities for Barrick Gold and Stepstone

-0.49

Correlation Coefficient

Barrick Gold  Stepstone

Very good diversification

The 3 months correlation between Barrick and Stepstone is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group 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 Stepstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepstone Group has no effect on the direction of Barrick Gold i.e., Barrick Gold and Stepstone go up and down completely randomly.

Pair Corralation between Barrick Gold and Stepstone

Given the investment horizon of 90 days Barrick Gold Corp is expected to under-perform the Stepstone. But the stock apears to be less risky and, when comparing its historical volatility, Barrick Gold Corp is 1.23 times less risky than Stepstone. The stock trades about -0.41 of its potential returns per unit of risk. The Stepstone Group is currently generating about -0.27 of returns per unit of risk over similar time horizon. If you would invest  6,681  in Stepstone Group on September 23, 2024 and sell it today you would lose (869.00) from holding Stepstone Group or give up 13.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Barrick Gold Corp  vs.  Stepstone Group

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 January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Stepstone Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stepstone Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Stepstone is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Barrick Gold and Stepstone

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

The idea behind Barrick Gold Corp and Stepstone Group 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.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.