Correlation Between Wesdome Gold and OceanaGold
Can any of the company-specific risk be diversified away by investing in both Wesdome 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 Wesdome Gold and OceanaGold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wesdome Gold Mines and OceanaGold, you can compare the effects of market volatilities on Wesdome 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 Wesdome Gold with a short position of OceanaGold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wesdome Gold and OceanaGold.
Diversification Opportunities for Wesdome Gold and OceanaGold
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wesdome and OceanaGold is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Wesdome Gold Mines and OceanaGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OceanaGold and Wesdome 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 Wesdome Gold Mines 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 Wesdome Gold i.e., Wesdome Gold and OceanaGold go up and down completely randomly.
Pair Corralation between Wesdome Gold and OceanaGold
Assuming the 90 days trading horizon Wesdome Gold Mines is expected to under-perform the OceanaGold. But the stock apears to be less risky and, when comparing its historical volatility, Wesdome Gold Mines is 1.07 times less risky than OceanaGold. The stock trades about -0.04 of its potential returns per unit of risk. The OceanaGold is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 391.00 in OceanaGold on August 28, 2024 and sell it today you would earn a total of 43.00 from holding OceanaGold or generate 11.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wesdome Gold Mines vs. OceanaGold
Performance |
| Timeline |
| Wesdome Gold Mines |
| OceanaGold |
Wesdome Gold and OceanaGold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wesdome Gold and OceanaGold
The main advantage of trading using opposite Wesdome Gold and OceanaGold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wesdome 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.| Wesdome Gold vs. OceanaGold | Wesdome Gold vs. Torex Gold Resources | Wesdome Gold vs. Alamos Gold | Wesdome Gold vs. Dundee Precious Metals |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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