Correlation Between Osisko Development and Pan American

Can any of the company-specific risk be diversified away by investing in both Osisko Development and Pan American 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 Osisko Development and Pan American into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Osisko Development Corp and Pan American Silver, you can compare the effects of market volatilities on Osisko Development and Pan American 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 Osisko Development with a short position of Pan American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Osisko Development and Pan American.

Diversification Opportunities for Osisko Development and Pan American

0.23

Correlation Coefficient

Osisko Development  Pan American

Modest diversification

The 3 months correlation between Osisko and Pan is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Osisko Development Corp and Pan American Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan American Silver and Osisko Development 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 Osisko Development Corp are associated (or correlated) with Pan American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan American Silver has no effect on the direction of Osisko Development i.e., Osisko Development and Pan American go up and down completely randomly.

Pair Corralation between Osisko Development and Pan American

Considering the 90-day investment horizon Osisko Development Corp is expected to generate 1.06 times more return on investment than Pan American. However, Osisko Development is 1.06 times more volatile than Pan American Silver. It trades about -0.11 of its potential returns per unit of risk. Pan American Silver is currently generating about -0.16 per unit of risk. If you would invest  190.00  in Osisko Development Corp on September 22, 2024 and sell it today you would lose (15.00) from holding Osisko Development Corp or give up 7.89% of portfolio value over 90 days.

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

Osisko Development Corp  vs.  Pan American Silver

Osisko Development Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Osisko Development Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pan American Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pan American Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Pan American is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Osisko Development and Pan American

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

The idea behind Osisko Development Corp and Pan American Silver 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.