Correlation Between Wheaton Precious and Orezone Gold

Can any of the company-specific risk be diversified away by investing in both Wheaton Precious and Orezone 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 Orezone 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 Orezone Gold Corp, you can compare the effects of market volatilities on Wheaton Precious and Orezone 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 Orezone Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and Orezone Gold.

Diversification Opportunities for Wheaton Precious and Orezone Gold

0.69

Correlation Coefficient

Wheaton Precious  Orezone Gold

Poor diversification

The 3 months correlation between Wheaton and Orezone is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Orezone Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orezone Gold Corp 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 Orezone Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orezone Gold Corp has no effect on the direction of Wheaton Precious i.e., Wheaton Precious and Orezone Gold go up and down completely randomly.

Pair Corralation between Wheaton Precious and Orezone Gold

Assuming the 90 days trading horizon Wheaton Precious Metals is expected to under-perform the Orezone Gold. But the stock apears to be less risky and, when comparing its historical volatility, Wheaton Precious Metals is 2.01 times less risky than Orezone Gold. The stock trades about -0.06 of its potential returns per unit of risk. The Orezone Gold Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  60.00  in Orezone Gold Corp on October 21, 2024 and sell it today you would earn a total of  7.00  from holding Orezone Gold Corp or generate 11.67% return on investment over 90 days.

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

Wheaton Precious Metals  vs.  Orezone Gold Corp

Wheaton Precious Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wheaton Precious Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Orezone Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Wheaton Precious and Orezone Gold

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

The idea behind Wheaton Precious Metals and Orezone Gold 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.