Correlation Between Barrick Gold and TFI International

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

Diversification Opportunities for Barrick Gold and TFI International

-0.63

Correlation Coefficient

Barrick Gold  TFI International

Excellent diversification

The 3 months correlation between Barrick and TFI is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and TFI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFI International 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 TFI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TFI International has no effect on the direction of Barrick Gold i.e., Barrick Gold and TFI International go up and down completely randomly.

Pair Corralation between Barrick Gold and TFI International

Given the investment horizon of 90 days Barrick Gold Corp is expected to under-perform the TFI International. But the stock apears to be less risky and, when comparing its historical volatility, Barrick Gold Corp is 1.06 times less risky than TFI International. The stock trades about -0.12 of its potential returns per unit of risk. The TFI International is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  13,793  in TFI International on September 10, 2024 and sell it today you would earn a total of  1,388  from holding TFI International or generate 10.06% return on investment over 90 days.

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

Barrick Gold Corp  vs.  TFI International

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.

TFI International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TFI International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, TFI International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Barrick Gold and TFI International

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

The idea behind Barrick Gold Corp and TFI International 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.