Correlation Between Olin and Taseko Mines

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

By analyzing existing cross correlation between Olin Corporation and Taseko Mines, you can compare the effects of market volatilities on Olin and Taseko Mines 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 Olin with a short position of Taseko Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olin and Taseko Mines.

Diversification Opportunities for Olin and Taseko Mines

0.77

Correlation Coefficient

Olin  Taseko Mines

Poor diversification

The 3 months correlation between Olin and Taseko is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Olin Corp. and Taseko Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taseko Mines and Olin 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 Olin Corporation are associated (or correlated) with Taseko Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taseko Mines has no effect on the direction of Olin i.e., Olin and Taseko Mines go up and down completely randomly.

Pair Corralation between Olin and Taseko Mines

Considering the 90-day investment horizon Olin Corporation is expected to under-perform the Taseko Mines. But the stock apears to be less risky and, when comparing its historical volatility, Olin Corporation is 1.16 times less risky than Taseko Mines. The stock trades about -0.41 of its potential returns per unit of risk. The Taseko Mines is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  209.00  in Taseko Mines on September 22, 2024 and sell it today you would lose (11.00) from holding Taseko Mines or give up 5.26% of portfolio value over 90 days.

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

Olin Corp.  vs.  Taseko Mines

Olin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Olin Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Taseko Mines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taseko Mines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Olin and Taseko Mines

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

The idea behind Olin Corporation and Taseko 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.