Correlation Between Wheaton Precious and Osisko Gold

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

By analyzing existing cross correlation between Wheaton Precious Metals and Osisko Gold Ro, you can compare the effects of market volatilities on Wheaton Precious and Osisko 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 Wheaton Precious with a short position of Osisko Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and Osisko Gold.

Diversification Opportunities for Wheaton Precious and Osisko Gold

0.88

Correlation Coefficient

Wheaton Precious  Osisko Gold

Very poor diversification

The 3 months correlation between Wheaton and Osisko is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Osisko Gold Ro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Osisko Gold Ro and Wheaton Precious 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 Wheaton Precious Metals are associated (or correlated) with Osisko Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Osisko Gold Ro has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Osisko Gold go up and down completely randomly.

Pair Corralation between Wheaton Precious and Osisko Gold

Assuming the 90 days trading horizon Wheaton Precious is expected to generate 2.47 times less return on investment than Osisko Gold. In addition to that, Wheaton Precious is 1.07 times more volatile than Osisko Gold Ro. It trades about 0.07 of its total potential returns per unit of risk. Osisko Gold Ro is currently generating about 0.18 per unit of volatility. If you would invest  2,227  in Osisko Gold Ro on September 4, 2024 and sell it today you would earn a total of  462.00  from holding Osisko Gold Ro or generate 20.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Wheaton Precious Metals  vs.  Osisko Gold Ro

Wheaton Precious Metals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wheaton Precious Metals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Wheaton Precious may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Osisko Gold Ro

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Osisko Gold Ro are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Osisko Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wheaton Precious and Osisko Gold

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

The idea behind Wheaton Precious Metals and Osisko Gold Ro 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.