Correlation Between Barrick Gold and Twitter

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

Diversification Opportunities for Barrick Gold and Twitter

0.49

Correlation Coefficient

Barrick Gold  Twitter

Very weak diversification

The 3 months correlation between Barrick and Twitter is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold Corp and Twitter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Twitter 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 Twitter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Twitter has no effect on the direction of Barrick Gold i.e., Barrick Gold and Twitter go up and down completely randomly.

Pair Corralation between Barrick Gold and Twitter

Given the investment horizon of 90 days Barrick Gold Corp is expected to under-perform the Twitter. But the stock apears to be less risky and, when comparing its historical volatility, Barrick Gold Corp is 1.52 times less risky than Twitter. The stock trades about 0.0 of its potential returns per unit of risk. The Twitter is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,739  in Twitter on February 5, 2024 and sell it today you would earn a total of  1,631  from holding Twitter or generate 43.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	23.39%
Values	Daily Returns

Barrick Gold Corp  vs.  Twitter

Barrick Gold Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Barrick Gold Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, Barrick Gold may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Twitter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Twitter has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Twitter is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Barrick Gold and Twitter

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

The idea behind Barrick Gold Corp and Twitter 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.