Correlation Between Old Dominion and Barrick Gold

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

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

Diversification Opportunities for Old Dominion and Barrick Gold

0.65

Correlation Coefficient

Old Dominion  Barrick Gold

Poor diversification

The 3 months correlation between Old and Barrick is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Old Dominion Freight 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 Old Dominion 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 Old Dominion Freight 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 Old Dominion i.e., Old Dominion and Barrick Gold go up and down completely randomly.

Pair Corralation between Old Dominion and Barrick Gold

Given the investment horizon of 90 days Old Dominion Freight is expected to under-perform the Barrick Gold. In addition to that, Old Dominion is 1.24 times more volatile than Barrick Gold Corp. It trades about -0.12 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	Significant
Accuracy	100.0%
Values	Daily Returns

Old Dominion Freight  vs.  Barrick Gold Corp

Old Dominion Freight

Risk-Adjusted Performance

Very Weak

Over the last 90 days Old Dominion Freight has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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 Old Dominion and Barrick Gold

The main advantage of trading using opposite Old Dominion and Barrick Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Dominion 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 Old Dominion Freight 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.