Correlation Between Pan American and Osisko Development

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

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

Diversification Opportunities for Pan American and Osisko Development

0.23

Correlation Coefficient

Pan American  Osisko Development

Modest diversification

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

Pair Corralation between Pan American and Osisko Development

Given the investment horizon of 90 days Pan American Silver is expected to under-perform the Osisko Development. But the stock apears to be less risky and, when comparing its historical volatility, Pan American Silver is 1.06 times less risky than Osisko Development. The stock trades about -0.16 of its potential returns per unit of risk. The Osisko Development Corp is currently generating about -0.11 of returns per unit of risk over similar time horizon. 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

Pan American Silver  vs.  Osisko Development Corp

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.

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.

Pair Trading with Pan American and Osisko Development

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

The idea behind Pan American Silver and Osisko Development Corp 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.