Correlation Between MidCap Financial and Barrick Gold

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

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

Diversification Opportunities for MidCap Financial and Barrick Gold

-0.66

Correlation Coefficient

MidCap Financial  Barrick Gold

Excellent diversification

The 3 months correlation between MidCap and Barrick is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment 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 MidCap Financial 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 MidCap Financial Investment 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 MidCap Financial i.e., MidCap Financial and Barrick Gold go up and down completely randomly.

Pair Corralation between MidCap Financial and Barrick Gold

Assuming the 90 days horizon MidCap Financial Investment is expected to generate 0.2 times more return on investment than Barrick Gold. However, MidCap Financial Investment is 4.92 times less risky than Barrick Gold. It trades about -0.05 of its potential returns per unit of risk. Barrick Gold Corp is currently generating about -0.3 per unit of risk. If you would invest  2,546  in MidCap Financial Investment on October 12, 2024 and sell it today you would lose (10.00) from holding MidCap Financial Investment or give up 0.39% of portfolio value over 90 days.

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

MidCap Financial Investment  vs.  Barrick Gold Corp

MidCap Financial Inv

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MidCap Financial Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, MidCap Financial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

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.

Pair Trading with MidCap Financial and Barrick Gold

The main advantage of trading using opposite MidCap Financial and Barrick Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MidCap Financial 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 MidCap Financial Investment 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.