Correlation Between Barrick Gold and Wheaton Precious

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

By analyzing existing cross correlation between Barrick Gold and Wheaton Precious Metals, you can compare the effects of market volatilities on Barrick Gold and Wheaton Precious 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 Wheaton Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and Wheaton Precious.

Diversification Opportunities for Barrick Gold and Wheaton Precious

0.17

Correlation Coefficient

Barrick Gold  Wheaton Precious

Average diversification

The 3 months correlation between Barrick and Wheaton is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold and Wheaton Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wheaton Precious Metals 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 are associated (or correlated) with Wheaton Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wheaton Precious Metals has no effect on the direction of Barrick Gold i.e., Barrick Gold and Wheaton Precious go up and down completely randomly.

Pair Corralation between Barrick Gold and Wheaton Precious

Assuming the 90 days horizon Barrick Gold is expected to generate 0.94 times more return on investment than Wheaton Precious. However, Barrick Gold is 1.06 times less risky than Wheaton Precious. It trades about 0.04 of its potential returns per unit of risk. Wheaton Precious Metals is currently generating about 0.04 per unit of risk. If you would invest  1,735  in Barrick Gold on April 20, 2025 and sell it today you would earn a total of  65.00  from holding Barrick Gold or generate 3.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	92.06%
Values	Daily Returns

Barrick Gold  vs.  Wheaton Precious Metals

Barrick Gold

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Barrick Gold are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Barrick Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Wheaton Precious Metals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wheaton Precious Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Wheaton Precious is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Barrick Gold and Wheaton Precious

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

The idea behind Barrick Gold and Wheaton Precious Metals 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.