Correlation Between Marine Products and Barrick Gold

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

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

Diversification Opportunities for Marine Products and Barrick Gold

-0.71

Correlation Coefficient

Marine Products  Barrick Gold

Pay attention - limited upside

The 3 months correlation between Marine and Barrick is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Marine Products 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 Marine Products 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 Marine Products 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 Marine Products i.e., Marine Products and Barrick Gold go up and down completely randomly.

Pair Corralation between Marine Products and Barrick Gold

Considering the 90-day investment horizon Marine Products is expected to under-perform the Barrick Gold. In addition to that, Marine Products is 1.16 times more volatile than Barrick Gold Corp. It trades about -0.03 of its total potential returns per unit of risk. Barrick Gold Corp is currently generating about 0.21 per unit of volatility. If you would invest  1,537  in Barrick Gold Corp on December 28, 2024 and sell it today you would earn a total of  377.00  from holding Barrick Gold Corp or generate 24.53% return on investment over 90 days.

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

Marine Products  vs.  Barrick Gold Corp

Marine Products

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marine Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Marine Products is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the 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 16 (%) 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 Marine Products and Barrick Gold

The main advantage of trading using opposite Marine Products and Barrick Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marine Products 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 Marine Products 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .