Correlation Between Osisko Metals and Algonquin Power

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

Diversification Opportunities for Osisko Metals and Algonquin Power

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between Osisko and Algonquin is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Osisko Metals and Algonquin Power Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algonquin Power Utilities and Osisko Metals 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 Metals are associated (or correlated) with Algonquin Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algonquin Power Utilities has no effect on the direction of Osisko Metals i.e., Osisko Metals and Algonquin Power go up and down completely randomly.

Pair Corralation between Osisko Metals and Algonquin Power

Given the investment horizon of 90 days Osisko Metals is expected to generate 4.52 times more return on investment than Algonquin Power. However, Osisko Metals is 4.52 times more volatile than Algonquin Power Utilities. It trades about 0.03 of its potential returns per unit of risk. Algonquin Power Utilities is currently generating about 0.07 per unit of risk. If you would invest  25.00  in Osisko Metals on October 24, 2024 and sell it today you would earn a total of  6.00  from holding Osisko Metals or generate 24.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Osisko Metals  vs.  Algonquin Power Utilities

 Performance 
       Timeline  
Osisko Metals 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Osisko Metals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Osisko Metals showed solid returns over the last few months and may actually be approaching a breakup point.
Algonquin Power Utilities 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Algonquin Power Utilities are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Algonquin Power is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Osisko Metals and Algonquin Power Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Osisko Metals and Algonquin Power

The main advantage of trading using opposite Osisko Metals and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Osisko Metals position performs unexpectedly, Algonquin Power 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 Algonquin Power will offset losses from the drop in Algonquin Power's long position.
The idea behind Osisko Metals and Algonquin Power Utilities 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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