Correlation Between Orezone Gold and First Mining
Can any of the company-specific risk be diversified away by investing in both Orezone Gold and First Mining 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 Orezone Gold and First Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orezone Gold Corp and First Mining Gold, you can compare the effects of market volatilities on Orezone Gold and First Mining 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 Orezone Gold with a short position of First Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orezone Gold and First Mining.
Diversification Opportunities for Orezone Gold and First Mining
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Orezone and First is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Orezone Gold Corp and First Mining Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Mining Gold and Orezone 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 Orezone Gold Corp are associated (or correlated) with First Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Mining Gold has no effect on the direction of Orezone Gold i.e., Orezone Gold and First Mining go up and down completely randomly.
Pair Corralation between Orezone Gold and First Mining
Assuming the 90 days trading horizon Orezone Gold Corp is expected to under-perform the First Mining. But the stock apears to be less risky and, when comparing its historical volatility, Orezone Gold Corp is 1.24 times less risky than First Mining. The stock trades about -0.04 of its potential returns per unit of risk. The First Mining Gold is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 14.00 in First Mining Gold on September 5, 2024 and sell it today you would lose (1.00) from holding First Mining Gold or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orezone Gold Corp vs. First Mining Gold
Performance |
| Timeline |
| Orezone Gold Corp |
| First Mining Gold |
Orezone Gold and First Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orezone Gold and First Mining
The main advantage of trading using opposite Orezone Gold and First Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orezone Gold position performs unexpectedly, First Mining 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 First Mining will offset losses from the drop in First Mining's long position.| Orezone Gold vs. First Majestic Silver | Orezone Gold vs. Ivanhoe Energy | Orezone Gold vs. Faraday Copper Corp |
| First Mining vs. First Majestic Silver | First Mining vs. Ivanhoe Energy | First Mining vs. Orezone Gold Corp | First Mining vs. Faraday Copper Corp |
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 Stocks Directory module to find actively traded stocks across global markets.
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