Correlation Between Barrick Gold and Fosterville South

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

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

Diversification Opportunities for Barrick Gold and Fosterville South

0.9

Correlation Coefficient

Barrick Gold  Fosterville South

Almost no diversification

The 3 months correlation between Barrick and Fosterville is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Fosterville South Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fosterville South and Barrick Gold 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 Barrick Gold Corp are associated (or correlated) with Fosterville South. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fosterville South has no effect on the direction of Barrick Gold i.e., Barrick Gold and Fosterville South go up and down completely randomly.

Pair Corralation between Barrick Gold and Fosterville South

Given the investment horizon of 90 days Barrick Gold Corp is expected to generate 0.42 times more return on investment than Fosterville South. However, Barrick Gold Corp is 2.36 times less risky than Fosterville South. It trades about -0.16 of its potential returns per unit of risk. Fosterville South Exploration is currently generating about -0.1 per unit of risk. If you would invest  2,052  in Barrick Gold Corp on September 15, 2024 and sell it today you would lose (373.00) from holding Barrick Gold Corp or give up 18.18% of portfolio value over 90 days.

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

Barrick Gold Corp  vs.  Fosterville South Exploration

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 January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Fosterville South

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fosterville South Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Barrick Gold and Fosterville South

The main advantage of trading using opposite Barrick Gold and Fosterville South positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barrick Gold position performs unexpectedly, Fosterville South 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 Fosterville South will offset losses from the drop in Fosterville South's long position.

The idea behind Barrick Gold Corp and Fosterville South Exploration 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 Stocks Directory module to find actively traded stocks across global markets.