Correlation Between Osisko Development and Wesdome Gold

Can any of the company-specific risk be diversified away by investing in both Osisko Development and Wesdome 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 Osisko Development and Wesdome Gold 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 Wesdome Gold Mines, you can compare the effects of market volatilities on Osisko Development and Wesdome 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 Osisko Development with a short position of Wesdome Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Osisko Development and Wesdome Gold.

Diversification Opportunities for Osisko Development and Wesdome Gold

-0.58

Correlation Coefficient

Osisko Development  Wesdome Gold

Excellent diversification

The 3 months correlation between Osisko and Wesdome is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Osisko Development Corp and Wesdome Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesdome Gold Mines 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 Wesdome Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesdome Gold Mines has no effect on the direction of Osisko Development i.e., Osisko Development and Wesdome Gold go up and down completely randomly.

Pair Corralation between Osisko Development and Wesdome Gold

Considering the 90-day investment horizon Osisko Development Corp is expected to under-perform the Wesdome Gold. In addition to that, Osisko Development is 1.29 times more volatile than Wesdome Gold Mines. It trades about -0.03 of its total potential returns per unit of risk. Wesdome Gold Mines is currently generating about 0.22 per unit of volatility. If you would invest  878.00  in Wesdome Gold Mines on December 29, 2024 and sell it today you would earn a total of  297.00  from holding Wesdome Gold Mines or generate 33.83% return on investment over 90 days.

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

Osisko Development Corp  vs.  Wesdome Gold Mines

Osisko Development Corp

Risk-Adjusted Performance

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 fairly stable fundamental indicators, Osisko Development is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Wesdome Gold Mines

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wesdome Gold Mines are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Wesdome Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Osisko Development and Wesdome Gold

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

The idea behind Osisko Development Corp and Wesdome Gold Mines 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.