Correlation Between Centerra Gold and OceanaGold
Can any of the company-specific risk be diversified away by investing in both Centerra Gold and OceanaGold 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 Centerra Gold and OceanaGold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centerra Gold and OceanaGold, you can compare the effects of market volatilities on Centerra Gold and OceanaGold 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 Centerra Gold with a short position of OceanaGold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centerra Gold and OceanaGold.
Diversification Opportunities for Centerra Gold and OceanaGold
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Centerra and OceanaGold is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Centerra Gold and OceanaGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OceanaGold and Centerra Gold 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 Centerra Gold are associated (or correlated) with OceanaGold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OceanaGold has no effect on the direction of Centerra Gold i.e., Centerra Gold and OceanaGold go up and down completely randomly.
Pair Corralation between Centerra Gold and OceanaGold
Assuming the 90 days horizon Centerra Gold is expected to under-perform the OceanaGold. But the stock apears to be less risky and, when comparing its historical volatility, Centerra Gold is 1.19 times less risky than OceanaGold. The stock trades about -0.29 of its potential returns per unit of risk. The OceanaGold is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 411.00 in OceanaGold on August 25, 2024 and sell it today you would earn a total of 33.00 from holding OceanaGold or generate 8.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centerra Gold vs. OceanaGold
Performance |
| Timeline |
| Centerra Gold |
| OceanaGold |
Centerra Gold and OceanaGold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centerra Gold and OceanaGold
The main advantage of trading using opposite Centerra Gold and OceanaGold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centerra Gold position performs unexpectedly, OceanaGold 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 OceanaGold will offset losses from the drop in OceanaGold's long position.| Centerra Gold vs. Alamos Gold | Centerra Gold vs. NovaGold Resources | Centerra Gold vs. Eldorado Gold Corp | Centerra Gold vs. IAMGold |
| OceanaGold vs. Torex Gold Resources | OceanaGold vs. Wesdome Gold Mines | OceanaGold vs. Centerra Gold | OceanaGold vs. New Gold |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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