Correlation Between JD Sports and Barrick Gold

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

By analyzing existing cross correlation between JD Sports Fashion and Barrick Gold Corp, you can compare the effects of market volatilities on JD Sports and Barrick 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 JD Sports with a short position of Barrick Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Barrick Gold.

Diversification Opportunities for JD Sports and Barrick Gold

-0.77

Correlation Coefficient

JD Sports  Barrick Gold

Pay attention - limited upside

The 3 months correlation between JDSPY and Barrick is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Barrick Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrick Gold Corp and JD Sports 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 JD Sports Fashion are associated (or correlated) with Barrick Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrick Gold Corp has no effect on the direction of JD Sports i.e., JD Sports and Barrick Gold go up and down completely randomly.

Pair Corralation between JD Sports and Barrick Gold

Assuming the 90 days horizon JD Sports Fashion is expected to under-perform the Barrick Gold. In addition to that, JD Sports is 1.84 times more volatile than Barrick Gold Corp. It trades about -0.1 of its total potential returns per unit of risk. Barrick Gold Corp is currently generating about 0.23 per unit of volatility. If you would invest  1,537  in Barrick Gold Corp on December 29, 2024 and sell it today you would earn a total of  419.00  from holding Barrick Gold Corp or generate 27.26% return on investment over 90 days.

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

JD Sports Fashion  vs.  Barrick Gold Corp

JD Sports Fashion

Risk-Adjusted Performance

Very Weak

Over the last 90 days JD Sports Fashion has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Barrick Gold Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Barrick Gold Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, Barrick Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JD Sports and Barrick Gold

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

The idea behind JD Sports Fashion and Barrick 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.