Correlation Between Barrick Gold and Reyna Gold

Can any of the company-specific risk be diversified away by investing in both Barrick Gold and Reyna 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 Barrick Gold and Reyna Gold 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 Reyna Gold Corp, you can compare the effects of market volatilities on Barrick Gold and Reyna 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 Barrick Gold with a short position of Reyna Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and Reyna Gold.

Diversification Opportunities for Barrick Gold and Reyna Gold

-0.59

Correlation Coefficient

Barrick Gold  Reyna Gold

Excellent diversification

The 3 months correlation between Barrick and Reyna is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Reyna Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reyna Gold Corp 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 Reyna Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reyna Gold Corp has no effect on the direction of Barrick Gold i.e., Barrick Gold and Reyna Gold go up and down completely randomly.

Pair Corralation between Barrick Gold and Reyna Gold

Given the investment horizon of 90 days Barrick Gold is expected to generate 49.94 times less return on investment than Reyna Gold. But when comparing it to its historical volatility, Barrick Gold Corp is 7.7 times less risky than Reyna Gold. It trades about 0.01 of its potential returns per unit of risk. Reyna Gold Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Reyna Gold Corp on September 14, 2024 and sell it today you would lose (8.00) from holding Reyna Gold Corp or give up 66.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.34%
Values	Daily Returns

Barrick Gold Corp  vs.  Reyna Gold Corp

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.

Reyna Gold Corp

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Reyna Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile technical and fundamental indicators, Reyna Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barrick Gold and Reyna Gold

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

The idea behind Barrick Gold Corp and Reyna 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.