Correlation Between Barrick Gold and Volaris

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

Diversification Opportunities for Barrick Gold and Volaris

-0.84

Correlation Coefficient

Barrick Gold  Volaris

Pay attention - limited upside

The 3 months correlation between Barrick and Volaris is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Volaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volaris 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 Volaris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volaris has no effect on the direction of Barrick Gold i.e., Barrick Gold and Volaris go up and down completely randomly.

Pair Corralation between Barrick Gold and Volaris

Given the investment horizon of 90 days Barrick Gold Corp is expected to under-perform the Volaris. But the stock apears to be less risky and, when comparing its historical volatility, Barrick Gold Corp is 1.08 times less risky than Volaris. The stock trades about -0.2 of its potential returns per unit of risk. The Volaris is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  637.00  in Volaris on September 23, 2024 and sell it today you would earn a total of  158.00  from holding Volaris or generate 24.8% return on investment over 90 days.

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

Barrick Gold Corp  vs.  Volaris

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.

Volaris

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Volaris are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Volaris unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barrick Gold and Volaris

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

The idea behind Barrick Gold Corp and Volaris 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.