Correlation Between Barrick Gold and STRYKER

Can any of the company-specific risk be diversified away by investing in both Barrick Gold and STRYKER 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 STRYKER 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 STRYKER P 365, you can compare the effects of market volatilities on Barrick Gold and STRYKER 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 STRYKER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and STRYKER.

Diversification Opportunities for Barrick Gold and STRYKER

0.62

Correlation Coefficient

Barrick Gold  STRYKER

Poor diversification

The 3 months correlation between Barrick and STRYKER is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and STRYKER P 365 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRYKER P 365 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 STRYKER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRYKER P 365 has no effect on the direction of Barrick Gold i.e., Barrick Gold and STRYKER go up and down completely randomly.

Pair Corralation between Barrick Gold and STRYKER

Given the investment horizon of 90 days Barrick Gold Corp is expected to under-perform the STRYKER. In addition to that, Barrick Gold is 7.58 times more volatile than STRYKER P 365. It trades about -0.19 of its total potential returns per unit of risk. STRYKER P 365 is currently generating about -0.37 per unit of volatility. If you would invest  9,751  in STRYKER P 365 on October 10, 2024 and sell it today you would lose (189.00) from holding STRYKER P 365 or give up 1.94% of portfolio value over 90 days.

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

Barrick Gold Corp  vs.  STRYKER P 365

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.

STRYKER P 365

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STRYKER P 365 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, STRYKER is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Barrick Gold and STRYKER

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

The idea behind Barrick Gold Corp and STRYKER P 365 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.