Correlation Between Osisko Metals and Fireweed Zinc

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

By analyzing existing cross correlation between Osisko Metals and Fireweed Zinc, you can compare the effects of market volatilities on Osisko Metals and Fireweed Zinc 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 Fireweed Zinc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Osisko Metals and Fireweed Zinc.

Diversification Opportunities for Osisko Metals and Fireweed Zinc

-0.09

Correlation Coefficient

Osisko Metals  Fireweed Zinc

Good diversification

The 3 months correlation between Osisko and Fireweed is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Osisko Metals and Fireweed Zinc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fireweed Zinc 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 Fireweed Zinc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fireweed Zinc has no effect on the direction of Osisko Metals i.e., Osisko Metals and Fireweed Zinc go up and down completely randomly.

Pair Corralation between Osisko Metals and Fireweed Zinc

Given the investment horizon of 90 days Osisko Metals is expected to generate 1.35 times more return on investment than Fireweed Zinc. However, Osisko Metals is 1.35 times more volatile than Fireweed Zinc. It trades about 0.3 of its potential returns per unit of risk. Fireweed Zinc is currently generating about 0.15 per unit of risk. If you would invest  26.00  in Osisko Metals on September 22, 2024 and sell it today you would earn a total of  7.00  from holding Osisko Metals or generate 26.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Osisko Metals  vs.  Fireweed Zinc

Osisko Metals

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Osisko Metals are ranked lower than 12 (%) 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.

Fireweed Zinc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fireweed Zinc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Fireweed Zinc may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Osisko Metals and Fireweed Zinc

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

The idea behind Osisko Metals and Fireweed Zinc 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.

Check out your portfolio center.

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.