Correlation Between Honest and BARRICK

Can any of the company-specific risk be diversified away by investing in both Honest and BARRICK 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 Honest and BARRICK into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Honest Company and BARRICK PD AUSTRALIA, you can compare the effects of market volatilities on Honest and BARRICK 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 Honest with a short position of BARRICK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honest and BARRICK.

Diversification Opportunities for Honest and BARRICK

0.21

Correlation Coefficient

Honest  BARRICK

Modest diversification

The 3 months correlation between Honest and BARRICK is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Honest Company and BARRICK PD AUSTRALIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BARRICK PD AUSTRALIA and Honest 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 Honest Company are associated (or correlated) with BARRICK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BARRICK PD AUSTRALIA has no effect on the direction of Honest i.e., Honest and BARRICK go up and down completely randomly.

Pair Corralation between Honest and BARRICK

Given the investment horizon of 90 days Honest Company is expected to under-perform the BARRICK. In addition to that, Honest is 5.81 times more volatile than BARRICK PD AUSTRALIA. It trades about -0.17 of its total potential returns per unit of risk. BARRICK PD AUSTRALIA is currently generating about -0.02 per unit of volatility. If you would invest  10,076  in BARRICK PD AUSTRALIA on October 24, 2024 and sell it today you would lose (17.00) from holding BARRICK PD AUSTRALIA or give up 0.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	84.21%
Values	Daily Returns

Honest Company  vs.  BARRICK PD AUSTRALIA

Honest Company

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Honest Company are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Honest unveiled solid returns over the last few months and may actually be approaching a breakup point.

BARRICK PD AUSTRALIA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Honest and BARRICK

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

The idea behind Honest Company and BARRICK PD AUSTRALIA 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.