Correlation Between Lavoro Limited and Barrick Gold

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

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

Diversification Opportunities for Lavoro Limited and Barrick Gold

-0.63

Correlation Coefficient

Lavoro Limited  Barrick Gold

Excellent diversification

The 3 months correlation between Lavoro and Barrick is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lavoro Limited Class 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 Lavoro Limited 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 Lavoro Limited Class 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 Lavoro Limited i.e., Lavoro Limited and Barrick Gold go up and down completely randomly.

Pair Corralation between Lavoro Limited and Barrick Gold

Given the investment horizon of 90 days Lavoro Limited Class is expected to under-perform the Barrick Gold. In addition to that, Lavoro Limited is 2.14 times more volatile than Barrick Gold Corp. It trades about -0.01 of its total potential returns per unit of risk. Barrick Gold Corp is currently generating about 0.01 per unit of volatility. If you would invest  1,673  in Barrick Gold Corp on September 3, 2024 and sell it today you would earn a total of  76.00  from holding Barrick Gold Corp or generate 4.54% return on investment over 90 days.

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

Lavoro Limited Class  vs.  Barrick Gold Corp

Lavoro Limited Class

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lavoro Limited Class are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Lavoro Limited may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 latest unfluctuating performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Lavoro Limited and Barrick Gold

The main advantage of trading using opposite Lavoro Limited and Barrick Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lavoro Limited 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 Lavoro Limited Class 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.