Correlation Between Olin and New Gold

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

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

Diversification Opportunities for Olin and New Gold

-0.54

Correlation Coefficient

Olin  New Gold

Excellent diversification

The 3 months correlation between Olin and New is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Olin Corp. and New Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Gold and Olin 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 Olin Corporation are associated (or correlated) with New Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Gold has no effect on the direction of Olin i.e., Olin and New Gold go up and down completely randomly.

Pair Corralation between Olin and New Gold

Considering the 90-day investment horizon Olin Corporation is expected to under-perform the New Gold. In addition to that, Olin is 1.19 times more volatile than New Gold. It trades about -0.15 of its total potential returns per unit of risk. New Gold is currently generating about 0.15 per unit of volatility. If you would invest  275.00  in New Gold on January 17, 2025 and sell it today you would earn a total of  99.00  from holding New Gold or generate 36.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Olin Corp.  vs.  New Gold

Olin

Risk-Adjusted Performance

Very Weak

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

New Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in New Gold are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, New Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Olin and New Gold

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

The idea behind Olin Corporation and New Gold 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.