Correlation Between Wheaton Precious and Barrick Gold

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Can any of the company-specific risk be diversified away by investing in both Wheaton Precious and Barrick 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 Wheaton Precious and Barrick Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wheaton Precious Metals and Barrick Gold, you can compare the effects of market volatilities on Wheaton Precious and Barrick 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 Wheaton Precious with a short position of Barrick Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and Barrick Gold.

Diversification Opportunities for Wheaton Precious and Barrick Gold

0.17
  Correlation Coefficient

Average diversification

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

Pair Corralation between Wheaton Precious and Barrick Gold

Assuming the 90 days horizon Wheaton Precious is expected to generate 1.11 times less return on investment than Barrick Gold. In addition to that, Wheaton Precious is 1.06 times more volatile than Barrick Gold. It trades about 0.04 of its total potential returns per unit of risk. Barrick Gold is currently generating about 0.04 per unit of volatility. If you would invest  1,735  in Barrick Gold on April 21, 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 Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy90.63%
ValuesDaily Returns

Wheaton Precious Metals  vs.  Barrick Gold

 Performance 
       Timeline  
Wheaton Precious Metals 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.
Barrick Gold 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Wheaton Precious and Barrick Gold Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Wheaton Precious and Barrick Gold

The main advantage of trading using opposite Wheaton Precious and Barrick Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious position performs unexpectedly, Barrick 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 Barrick Gold will offset losses from the drop in Barrick Gold's long position.
The idea behind Wheaton Precious Metals and Barrick Gold 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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