Correlation Between Lion One and Barrick Gold

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

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

Diversification Opportunities for Lion One and Barrick Gold

0.15

Correlation Coefficient

Lion One  Barrick Gold

Average diversification

The 3 months correlation between Lion and Barrick is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals 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 Lion One 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 Lion One Metals 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 Lion One i.e., Lion One and Barrick Gold go up and down completely randomly.

Pair Corralation between Lion One and Barrick Gold

Assuming the 90 days horizon Lion One Metals is expected to under-perform the Barrick Gold. In addition to that, Lion One is 2.94 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 0.26 per unit of volatility. If you would invest  1,606  in Barrick Gold Corp on November 28, 2024 and sell it today you would earn a total of  203.00  from holding Barrick Gold Corp or generate 12.64% return on investment over 90 days.

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

Lion One Metals  vs.  Barrick Gold Corp

Lion One Metals

Risk-Adjusted Performance

Weak

Over the last 90 days Lion One Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Lion One is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Barrick Gold Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Barrick Gold Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Barrick Gold is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Lion One and Barrick Gold

The main advantage of trading using opposite Lion One and Barrick Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One 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 Lion One Metals 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.